The Relationship Between the AS-AD Model and the Phillips Curve

question 199

Multiple Choice

The relationship between the AS-AD model and the Phillips curve points out that as aggregate demand increases, the unemployment rate

• A) decreases and the inflation rate rises.
• B) increases and the inflation rate falls.
• C) decreases and the price level falls.
• D) increases and the inflation rate rises.
• E) decreases and the inflation rate does not change, only the price level rises.

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Definitions:

Democratic Globalization

The spread of democracy around the world and the integration of democratic norms and values into international relations and institutions.

Decreases Political Stability

A reduction in the ability of a governmental system to provide consistent governance and policy, often leading to uncertainty, unrest, or conflict.

Basic Needs

Fundamental requirements necessary for individuals to live a healthy and satisfactory life, such as food, water, shelter, education, and healthcare.

Investment Climate

The economic, financial, and socio-political environment influencing the willingness and ability of individuals and firms to invest in a particular country or region.