A Given Reduction in Government Spending Will Dampen Demand-Pull Inflation

question 205

Multiple Choice

A given reduction in government spending will dampen demand-pull inflation by a greater amount when the

• A)economy's MPS is large.
• B)economy's aggregate supply curve is flat.
• C)economy's aggregate supply curve is steep.
• D)unemployment rate is high.

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Definitions:

Union Shops

Workplaces where all employees must join a union within a certain time period after being hired.

Right-To-Work Laws

Legislation that prohibits compulsory membership in labor unions as a condition of employment.

Exit Mechanism

The method of resolving workplace dissatisfaction by quitting one’s job and searching for another.

Voice Mechanism

Communication by workers through their union to resolve grievances with an employer.