Figure 28-4 -Refer to Figure 28-4.Consider the Phillips Curves Shown in the Curves

question 73

Multiple Choice

Figure 28-4

-Refer to Figure 28-4.Consider the Phillips curves shown in the above graph. We can conclude from this graph that

• A) the natural rate of unemployment in this economy is 5.5 percent.
• B) the expected rate of inflation in this economy is 10 percent.
• C) ceteris paribus, a fall in the rate of inflation to 5 percent will increase unemployment to 7.5 percent in the short run.
• D) All of the above are correct.

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Definitions:

FICA Tax

Taxes required by the Federal Insurance Contributions Act, funding Social Security and Medicare benefits.

FUTA Tax

The Federal Unemployment Tax Act tax, which employers pay to help fund state workforce agencies.

SUTA Tax

A state unemployment tax assessed by individual states on employers, used to fund their unemployment insurance and job service programs.

Medicare

A federal health insurance program in the United States primarily for people aged 65 and older, as well as for some younger individuals with disabilities.