Suppose an Economy Is Operating with an Inflationary Gap

question 39

Multiple Choice

Suppose an economy is operating with an inflationary gap. In this case, policymakers would
Seek to move the economy

• A) back down the Phillips curve, trading a reduction in unemployment for an increase in inflation.
• B) up the Phillips curve, trading a reduction in unemployment for an increase in inflation.
• C) back down the Phillips curve, trading a reduction in inflation for an increase in unemployment.
• D) up the Phillips curve, trading a reduction in inflation for an increase in unemployment.

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Definitions:

Tapeworms

Parasitic flatworms that live in the digestive tract of vertebrates, absorbing nutrients from the host's intestine.

Annelids

A phylum of segmented worms that includes earthworms, leeches, and their relatives, characterized by a segmented body and a coelom.

Segmentation

The division of a body or a structure into repetitive segments, as seen in organisms like annelids, arthropods, and vertebrates.

Locomotion

The ability or act of moving from place to place, a fundamental biological activity allowing organisms to interact with their environment.