In the Short Run, If the Economy Is in a Phillips

question 117

Multiple Choice

In the short run, if the economy is in a Phillips phase of the inflation-unemployment relationship, an increase in aggregate demand will generate

• A) an increase in the price level and an increase in the unemployment rate.
• B) an increase in the price level and a decrease in the unemployment rate.
• C) an increase in the price level and no change in the unemployment rate.
• D) a decrease in the price level and an increase in the unemployment rate.

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholder members. It is the share of profits and retained earnings that the company pays out to its investors.

Operating Activities

Business actions related directly to the production, sale, and delivery of goods and services, as distinguished from financing and investing activities.

Cash Dividends

Payments made by a corporation to its shareholders, typically out of its profits or reserves.

Accrued Liabilities

Financial obligations that a company has incurred during a period but has not yet paid by the end of that period.