1- Which one of the following represents one of the basic problems illustrated by the Phillips curve? a. That the inflation rate tends to decrease as the economy moves closer to full employment (i.e. low unemployment rate) b. That the unemployment rate tends to decrease as the economy creeps toward a balanced market (employment equilibrium) c. That high levels of unemployment tend to accompany high rates of inflation d. That the inflation rate tends to increase as the economy moves closer to full employment (i.e. low unemployment rate) and vice-versa. Question -2- Why have fiscal and monetary policies been criticized as tools to fight stagflation? a. Because they are able to cure inflation but not unemployment. b. Because they are able to cure unemployment but not inflation. c. Because they are unable to cure either unemployment or inflation. d. Because they are unable to cure both unemployment and inflation at the same time. They can only cure one or the other, but not both concurrently. Question -3-Which of the following would neutralize the crowding-out effect? HINT: What measure would need to be take to prevent the escalation of interest rates. Remember my charts on combining fiscal and monetary policy. a. An increase in money demand b. An increase in tax rates c. An increase in the money supply d. A decrease in the money supply Question -4Graphically, what is necessary for an economy to escape the grips of stagflation? a. Shift the AS curve to the right b. Shift the AD curve to the right c. Shift the AS curve to the left d. Shift the AD curve to the left Question5 All of the following, except one, were policies supported by the supply-siders. Which is the exception? a. Deregulation of government involvement in the economy b. Contracting out of government services c. Increase government spending and raise taxation d. Privatization of Canada's crown corporations e. Reducing taxes Question -6-What does "monetizing the debt" involve? a. Government selling bonds to the general public b. The Bank of Canada selling bonds to government c. Government selling bonds to the Bank of Canada d. The Bank of Canada selling bonds to the general public