Refer to Figure 16.2. For the given Phillips curve, a decrease in aggregate demand, ceteris paribus, could cause a
A. Rightward shift in the curve.
B. Movement from point A to point B.
C. Movement from point B to point A.
D. Leftward shift in the curve.
Answer: B
You might also like to view...
How Monetary Policy affects the Economy?
In the above figure, the relationship between the tax rate and tax revenue is positive and becoming less steep between tax rates of
A) 0 percent and 30 percent. B) 30 percent and 100 percent. C) 0 percent and 100 percent. D) None of the above answers are correct.
When in 1985 a British pound cost approximately $1.30, a Shetland sweater that cost 100 British pounds would have cost $130. With a weaker dollar, the same Shetland sweater would have cost
A) less than $130. B) more than $130. C) $130, since the exchange rate does not affect the prices that American consumers pay for foreign goods. D) $130, since the demand for Shetland sweaters will decrease to prevent an increase in price due to the stronger dollar.
Given the assumptions of the classical model
A) the economy will often experience recessions and expansions. B) expansion will be the normal condition, but recessions will often be severe and require government intervention. C) the macroeconomy is erratic, and problems will often be increased over time. D) the market is a self-correcting mechanism.