Comparing the AS-AD Model and the Phillips Curve, We See

question 51

Multiple Choice

Comparing the AS-AD model and the Phillips curve, we see that

• A) they both are graphed as a relationship between the rate of inflation and the unemployment rate.
• B) the Phillips curve is graphed as a relationship between the price level and the unemployment rate.
• C) the AS-AD model is graphed as a relationship between the inflation rate and the rate of real GDP.
• D) the AS-AD model uses the price level and the Phillips curve uses the rate of inflation.
• E) the AS-AD model uses the price level and the Phillips curve uses real GDP.

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Definitions:

Required Return

The minimum profit or yield that an investor expects to receive on an investment, considering the risk involved.

Stock Purchase

The act of acquiring ownership shares in a company, representing a claim on part of its assets and earnings.

Required Return

The minimum expected return an investor demands for an investment, considering its risk and the returns available from other investments.

Dividends

Dividends are payments made by a corporation to its shareholders, usually as a distribution of profits, providing an income stream to investors.