If the Public Expects the Incumbent Administration to Stimulate the Economy

question 17

Multiple Choice

If the public expects the incumbent administration to stimulate the economy shortly before an election:

• A)the unemployment rate will fall at the cost of higher inflation.
• B)the economy will move up the short-run Phillips curve.
• C)lower inflation will prevail, and the rate of unemployment will remain unchanged.
• D)the economy will immediately move up the long-run Phillips curve.
• E)neither inflation nor the unemployment rate will change.

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Definitions:

Business Establishments

Places of business where commercial, industrial, or professional activities are conducted, often referring to a physical location.

Frictional Unemployment

Short-term unemployment that occurs when people are between jobs or entering the labor force for the first time.

Demand For Labor

The total amount of workers that employers are willing and able to hire at a given wage rate in a given time period.

Job Search

The process by which individuals seek employment opportunities, matching their skills and preferences with available jobs.