Quiz on the Phillips Curve

What does the Phillips Curve suggest about the relationship between inflation and unemployment?

• There is a fluctuating relationship

• There is no relationship

• There is an inverse relationship

• There is a direct relationship

During which decades was the Phillips Curve analysis particularly influential?

• 1940s and 1950s

• 1960s and 1970s

• 1980s and 1990s

• 1950s and 1960s

What economic phenomenon challenged the validity of the Phillips Curve in the 1970s?

• Hyperinflation

• Stagflation

• Deflation

• Recession

Who originally analyzed the relationship between money wage growth and unemployment?

• Paul Samuelson

• A.W. Phillips

• Milton Friedman

• John Maynard Keynes

What do monetarists argue about the long-term relationship between unemployment and inflation?

• There is a permanent trade-off

• There is a temporary trade-off

• There is a direct correlation

• There is no trade-off

What happens to inflationary pressures as the economy approaches full capacity?

• Inflation remains constant

• Inflation becomes unpredictable

• Inflation decreases

• Inflation increases

What did the Bank of England do during 2009-2013 regarding inflation?

• Increased inflation to 5%

• Tolerated inflation above 2%

• Eliminated inflation completely

• Reduced inflation to below 1%

What is the natural rate of unemployment according to monetarists?

• It is always zero

• It is determined by supply-side factors

• It fluctuates with inflation

• It is influenced by demand-side policies

What is a key argument of Keynesians regarding unemployment?

• Inflation is the only concern

• Unemployment is solely a supply-side issue

• Demand-side policies can reduce unemployment in the long term

• Unemployment is always temporary

What did the Phillips Curve suggest about policymakers' choices?

• They should avoid any trade-offs

• They must focus on long-term growth only

• They can prioritize either inflation or unemployment

• They can ignore inflation