The Phillips Curve Reflects a

question 166

Multiple Choice

The Phillips curve reflects a

• A)positive correlation between the inflation rate and the unemployment rate.
• B)negative correlation between the inflation rate and the unemployment rate.
• C)positive correlation between the inflation rate and the exchange rate.
• D)negative correlation between the inflation rate and government spending.
• E)positive correlation between interest rates and the unemployment rate.

---

Definitions:

Negative Excess Reserves

A situation where a bank has less reserves than the minimum required reserve, indicating a potential liquidity problem.

Required Reserves

The minimum amount of funds that a bank must hold in reserve against deposits, as mandated by central banking authorities, to ensure bank liquidity.

Actual Reserves

The physical amount of a commodity or cash held as reserves in a financial institution or by an organization.

Monetary Policy

Measures undertaken by a government's central bank to regulate the economy's money supply and interest rates to achieve macroeconomic objectives like controlling inflation, consumption, growth, and liquidity.