Suppose an Economy Is Operating with a Contractionary Gap

question 34

Multiple Choice

Suppose an economy is operating with a contractionary gap.In this case, policymakers Would seek to move the economy

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

---

Definitions:

Investment

An asset or item acquired with the goal of generating income or appreciation in the future.

Accounting

The systematic process of recording, analyzing, summarizing, and reporting financial transactions of a business or individual to ensure accurate financial statements.

Investments

Financial assets or items acquired with the intention of generating income or profit.

Significant Influence

The power to participate in the financial and operating policy decisions of another entity without having full control or joint control.