Innovative Economics Phillips Curve Test - 72+ MCQs: Economics - Phillips Curve Quiz: Assess Your Understanding with Questions and Answers

1. What is the primary criticism of the Phillips Curve in its traditional form?

It overemphasizes the role of expectations

It assumes a stable trade-off between inflation and unemployment

It neglects the impact of supply-side factors

It relies too heavily on historical data

2. What does the Phillips Curve suggest about the relationship between inflation and unemployment?

There is a direct relationship

There is an inverse relationship

There is no relationship

The relationship is cyclical

3. Which of the following factors can shift the Short-Run Phillips Curve?

Changes in aggregate demand

Technological advancements

Changes in the natural rate of unemployment

Government regulations

4. Which term describes a situation where inflation increases while unemployment decreases?

Disinflation

Deflation

Hyperinflation

Reflation

5. Who is credited with introducing the concept of the Phillips Curve?

Alban William Phillips

John Maynard Keynes

Milton Friedman

Paul Samuelson

6. What is one criticism of using the Phillips Curve for economic policy?

It overemphasizes the role of fiscal policy.

It assumes a stable trade-off between inflation and unemployment.

It disregards the impact of monetary policy.

It focuses too much on long-term economic trends.

7. In a Phillips Curve model, what does a movement from point A to point B along the curve represent?

An increase in inflation with no change in unemployment

A decrease in inflation with no change in unemployment

A simultaneous increase in inflation and unemployment

A decrease in inflation and unemployment

8. What does the Natural Rate of Unemployment refer to?

Zero unemployment

Unemployment due to structural factors

Full employment without inflation

The highest sustainable employment level without accelerating inflation

9. What does the 'Expectations-Augmented Phillips Curve' incorporate?

Adaptive expectations

Rational expectations

Static expectations

Dynamic expectations

10. What is one limitation of relying solely on the Phillips Curve for policymaking?

It assumes constant expectations about inflation.

It disregards the impact of supply shocks.

It neglects the influence of fiscal policy.

It focuses only on short-term economic fluctuations.

11. Which critique suggests that the Phillips Curve relationship may shift over time?

Monetarist critique

Keynesian critique

Rational expectations critique

Supply-side critique

12. What is 'hysteresis' in the context of the Phillips Curve?

A phenomenon where temporary unemployment becomes permanent

A theory explaining short-run economic fluctuations

A concept related to long-term economic growth

A measure of economic inequality

13. Which economic concept suggests that there is a trade-off between inflation and unemployment in the short run?

The Quantity Theory of Money

The Natural Rate Hypothesis

The Phillips Curve

The Rational Expectations Theory

14. What does the 'Natural Rate Hypothesis' suggest about the long-run Phillips Curve?

It is vertical

It is horizontal

It slopes upward

It slopes downward

15. Who originally proposed the Phillips Curve?

A.W. Phillips

John Maynard Keynes

Milton Friedman

Paul Samuelson

16. What does the 'Non-Accelerating Inflation Rate of Unemployment' (NAIRU) represent?

The unemployment rate at which inflation remains stable

The unemployment rate below which inflation tends to accelerate

The unemployment rate above which inflation tends to decelerate

The unemployment rate that ensures full employment

17. What is a potential implication of a negative supply shock on the Phillips Curve relationship?

Higher inflation and lower unemployment

Lower inflation and higher unemployment

Lower inflation and lower unemployment

Higher inflation and higher unemployment

18. Which term describes a policy that aims to reduce inflation at the cost of increased unemployment in the short run?

Expansionary policy

Supply-side policy

Monetarist policy

Contractionary policy

19. What does the term 'stagflation' signify?

High economic growth and low inflation

High inflation and low economic growth

Low inflation and low economic growth

High inflation and high economic growth

20. What does the 'Long Run Phillips Curve' depict?

It illustrates the relationship between inflation and unemployment in the short run

It focuses on the impact of supply shocks on economic outcomes

It represents the natural rate of unemployment

It shows the relationship between inflation and unemployment in the long run

21. Which of the following best describes the 'Lipsey curve'?

A graphical representation of the trade-off between unemployment and job vacancies

A modification of the Phillips Curve considering inflation expectations

A measure of the efficiency wage theory

A theoretical framework that combines Keynesian and Monetarist views

22. What does the concept of 'adaptive expectations' suggest in the context of the Phillips Curve?

People form expectations based on past data and events.

People have perfect foresight about future inflation.

People adjust expectations immediately to any policy change.

People rely solely on government announcements for expectations.

23. Who is credited with introducing the Phillips Curve concept?

John Maynard Keynes

A.W. Phillips

Milton Friedman

Paul Samuelson

24. Which of the following best describes the concept of 'adaptive expectations' in relation to the Phillips Curve?

Individuals form expectations based on past experiences

Individuals have perfect foresight about future economic conditions

Individuals adjust expectations immediately to new information

Individuals rely solely on government forecasts

25. Who developed the concept of 'stagflation'?

John Maynard Keynes

Milton Friedman

Paul Samuelson

Alban William Phillips

26. How do supply-side policies impact the Phillips Curve?

They strengthen the inverse relationship

They weaken the inverse relationship

They shift the curve horizontally

They have no impact on the relationship

27. Which of these factors can shift the long-run Phillips Curve?

Temporary changes in aggregate demand

Permanent shifts in aggregate supply

Technological advancements

Changes in fiscal policy

28. What is the primary criticism of the Phillips Curve?

It oversimplifies the relationship between inflation and unemployment

It neglects the role of expectations in influencing economic outcomes

It fails to account for supply-side factors

All of the above

29. How might supply-side shocks impact the Phillips Curve relationship?

By reinforcing the inverse relationship between inflation and unemployment

By causing movements along the Phillips Curve

By leading to stagflation scenarios

By making the Phillips Curve irrelevant

30. What is the primary critique of the Phillips Curve in the long run?

It is vertically straight

It does not account for supply shocks

It assumes rational expectations

It neglects the role of monetary policy

Economics - Phillips Curve MCQ Test 3