Based on the Reasoning of the Original Version of the Phillips

question 31

Multiple Choice

Based on the reasoning of the original version of the Phillips curve, conventional wisdom of the 1960s was that:

• A) money is not neutral.
• B) there is a strong positive relationship between unemployment and inflation.
• C) there is no relationship between economic growth and the savings rate.
• D) there is a permanent trade-off between inflation and economic performance.
• E) the real interest rate is always equal to 2 percent.

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Definitions:

Long-term Debt

Borrowed money that a company or individual must repay over a period longer than one year.

Equipment Trade

The act of exchanging one piece of business equipment for another, often to upgrade or replace assets.

Depreciation Expense

The portion of the cost of a fixed asset deducted as an expense over its useful life, reflecting the asset's consumption or wear and tear.

Common Stock

Shares of ownership in a corporation, granting holders voting rights and a share in the company's profits through dividends.