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Phillips Curve

Quiz by Steve Jinman

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4 questions
Show answers
  • Q1
    The Phillips Curve shows the relationship between unemployment and :
    Tax Revenue
    Inflation
    Output
    Balance of Payments
    30s
  • Q2
    The diagram shows one long run one Phillips Curve and three short run Phillips Curves. The economy is initially at NAIRU (0X) with an inflation rate of 5%. If the government seeks to reduce unemployment to 0Z what will be the effect on inflation?
    Question Image
    Raise it to 7%
    Reduce to 0%
    Raise it to 9%
    Leave it at 5%
    30s
  • Q3
    If there is spare capacity in the economy what will a fall in unemployment do to inflation?
    Disinflation
    Deflation
    Raise inflation
    No effect
    30s
  • Q4
    Why may a fall in unemployment cause rising inflation?
    Increasing AD leading to wage rises
    Reduced expenditure on job seekers allowance
    There will be tax cuts
    If unemployment is lower than NAIRU real wages are rising
    30s

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