According to the Phillips Curve,policymakers Could Reduce Both Inflation and Unemployment

question 42

Multiple Choice

According to the Phillips curve,policymakers could reduce both inflation and unemployment by

• A)increasing the money supply.
• B)increasing government expenditures.
• C)raising taxes.
• D)None of the above is correct.

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Definitions:

Tax

Compulsory payments made to the government, imposed on earnings from employment and profits from businesses, or included in the price of certain goods, services, and dealings.

Arthur Laffer

An economist known for the Laffer Curve, which postulates a relationship between tax rates and tax revenue, suggesting there exists an optimal tax rate for maximizing revenue.

Tax Rates

The fraction of earnings on which a person or corporate entity must pay taxes.

Tax Revenue

The funds that governments garner from taxing activities.