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:

Foraging

The act of searching for and exploiting food resources in the wild, typically by hunting, fishing, or gathering plant material.

Species Diversity

The variety of species within a habitat, ecosystem, or geographic area, encompassing both the number of different species (species richness) and their relative abundance.

Clearing Forest

The process of removing trees and vegetation from wooded areas, often for agricultural or urban development purposes.

Hunting

The practice of pursuing and capturing or killing wild animals for food, sport, or other purposes.