Question #1

Given the Phillips curves below, indicate whether each of the following statements are True or False

3) The movement from A to B is a result of a shi in the AD to the left curve 13) The economy moves from A to B because wages increase C) The economy moves from B to C because the AS shifts to the left d) The movement for A to B could be caused by an increase in government spending 6) The Phillips curve shifts from PCI to PCZ because wages have decreased f) The LRPC could shift to the right if there is a technology improvements in the economy If the economy is experiencing a recessionary gap. scal policy dictates that a reduction in th tax rate is the appropriate course of action If the economy is experiencing an inationary gap, monetary policy dictates that the government should switch their deposits from the Bank of Canada to the chartered banks If managed correctly, an economy can have both low ination and a low unemployment rate Government decits are the accumulations of annual debts As the nominal interest rate increases. the quantity demanded of money decreases If the exchange rate increases (u$lc$). then the ination rate will also increase 7. Monetarists believe that the velocity of money and the real GDP are stable