OCR Eco: Chap 14 Phillip's curve

What does NAIRU stand for?

• Non-accelerating inflation rate of unemployment

• National average inflation rate of unemployment

• Non-accelerating interest rate of unemployment

• National average interest rate of unemployment

What is the effect of higher wages as the economy approaches full employment?

• Increase in production costs

• Decrease in production costs

• Decrease in inflation

• Increase in unemployment

What does the Phillips Curve help policymakers understand about their decisions?

• The impact on inflation and unemployment

• The impact on international trade

• The impact on technological growth

• The impact on environmental policies

What does the Phillips Curve not take into account according to the text?

• Productivity, economic growth, and income distribution

• Government spending

• International trade

• Technological advancements

What is Aggregate Demand?

• A. The total supply of goods and services produced within an economy

• B. The total demand for goods and services within an economy

• C. The level of unemployment that exists when the economy is operating at its potential output

• D. Government policies related to taxation and spending

Which approach to aggregate supply suggests that changes in aggregate demand have a long-term impact on output and employment?

• Keynesian approach

• Neo-classical approach

• Phillips Curve approach

• Stagflation approach

What is the relationship between inflation and unemployment?

• No relationship

• The relationship between inflation and unemployment

• The relationship between inflation and GDP

• The relationship between unemployment and GDP

What is the level of unemployment that exists when the economy is operating at its potential output?

• The level of unemployment that exists when the economy is operating at its potential output

• The level of unemployment at which inflation remains stable

• The level of unemployment that exists when the economy is in recession

• The level of unemployment that exists when the economy is in expansion

Explain how the Phillips Curve can guide macroeconomic policymakers in formulating appropriate monetary and fiscal policies. Discuss the insights it provides and how policymakers can utilize this information. Use examples to support your answer.

• The Phillips Curve suggests that high inflation always leads to high unemployment.

• The Phillips Curve suggests that low inflation always leads to low unemployment.

• The Phillips Curve suggests a trade-off between inflation and unemployment, guiding policymakers in balancing these factors.

• The Phillips Curve suggests no relationship between inflation and unemployment.

Which factors influence the natural rate of unemployment?

• Labour market conditions, technological advancements, and institutional factors

• Only technological advancements

• Only labour market conditions

• Only institutional factors