The Traditional Phillips Curve Suggests That, If Government Uses an Expansionary

question 114

Multiple Choice

The traditional 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) the inflation rate will increase.
• D) the natural rate of unemployment may fall.

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Definitions:

Exergonic Reaction

A chemical reaction that releases energy, often in the form of heat, making it energetically favorable.

Enthalpy Reaction

A thermodynamic quantity equivalent to the total heat content of a system, representing the sum of its internal energy and the product of its pressure and volume, especially useful in the study of heat exchange in chemical reactions.

Electrochemical Reaction

A chemical reaction that involves the transfer of electrons from one species to another, often associated with electricity.

Exergonic

Describing a chemical reaction that releases energy to its surroundings, typically in the form of heat or work.