When the aggregate supply curve shifts adversely, what happens to the relationship shown in the Phillips curve?
a. It is reinforced, and made more applicable for policy.
b. It is destroyed, and no longer applies for policy.
c. It is unchanged, although the curve becomes less steep.
d. It is unchanged, although the curve shifts inward and to the left.
b
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If the economy experiences an inflationary gap, a contractionary monetary policy will
A) increase interest rates and increase the bond prices. B) increase interest rates and decrease the bond prices. C) decrease interest rates and increase the bond prices. D) decrease interest rates and decrease the bond prices.
Holding everything else constant, if total factor productivity increases, the debt-to-GDP ratio will ________, and if the labor force growth rate increases, the debt-to-GDP ratio will ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease