The Phillips Curve Suggests That, If Government Uses an Expansionary

question 45

Multiple Choice

The Phillips Curve suggests that, if government uses an expansionary fiscal policy to stimulate output and employment:

• A)unemployment may actually increase because of the crowding-out effect.
• B)tax revenues may increase even though tax rates have been reduced.
• C)inflation may result.
• D)the natural rate of unemployment may fall.

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Definitions:

Injunction

A judicial order requiring a person or entity to do or cease doing a specific action.

Contract Law

A branch of law dealing with the formation, enforcement, and interpretation of agreements between parties.

Discharged by Agreement

The termination of contractual obligations through mutual consent of the parties involved.

Contract

A legally binding agreement between two or more parties that outlines obligations and rights of each party.