The Phillips Curve Suggests That, If Government Uses an Expansionary

question 45

Multiple Choice

The Phillips Curve suggests that, if government uses an expansionary fiscal policy to stimulate output and employment:

• A)unemployment may actually increase because of the crowding-out effect.
• B)tax revenues may increase even though tax rates have been reduced.
• C)inflation may result.
• D)the natural rate of unemployment may fall.

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