The Phillips Curve Tradeoff Implies

question 297

Multiple Choice

The Phillips curve tradeoff implies

• A)that if the curve is stable,society must accept increases in inflation in exchange for decreases in unemployment.
• B)that if the curve is unstable,society must accept increases in inflation in exchange for decreases in unemployment.
• C)that if the curve is stable,society must accept increases in inflation in exchange for increases in unemployment.
• D)that if the curve is unstable,society must accept falling unemployment when inflation falls.

---

Definitions:

Bilateral Monopoly

A bilateral monopoly occurs when a market consists of only one supplier (monopoly) and one buyer (monopsony), leading to unique negotiations and outcomes concerning prices and quantity.

Monopsonistic Employer

A market situation where a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers.

Minimum-Wage Legislation

Laws set by governments to establish the lowest amount that employers can pay their workers per hour.

Deflationary

Pertaining to or causing a decrease in the general price level of goods and services, often leading to increased purchasing power of money.