A Phillips Curve Implies

question 111

Multiple Choice

A Phillips curve implies

• A) a negative relationship between consumption and saving.
• B) a positive relationship between inflation and prices.
• C) a negative relationship between inflation and unemployment.
• D) a positive relationship between consumption expenditure and inflation.

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Definitions:

Functional Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, hindering problem-solving abilities.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs or hypotheses.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method, or decision.

Base-Rate Information

Statistical information about the relative frequency of events or characteristics within a given population.