Economics

1. The US experience with stagflation provided evidence for the stability of a Phillips Curve relationship. (True or False)?
2. Cost-push inflation would lead to a higher price level and a lower level of output. (True or False)?
3. The Vietnam War theory of stagflation claims that stagflation was caused by ...

A) the destruction of usable land and a military build up

B) a decrease in the money supply to finance war debts and a military build up

C) an increase in the money supply to finance war debts and demilitarization

D) a stagnant money supply and war time price controls

E) an increase in the gold reserves following a slow down in output growth

Qs

How might a long period of sustained inflation lead to a lower long-run growth rate?

1. inflation imposes a tax on returns to saving, thereby lowering funds available for investment
2. inflation discourages businesses from making risky capital investments
3. inflation reduces the real value of housing wealth and discourages consumption
4. inflation discourages buyers from shopping
5. inflation increases the real value of debt and encourages shopping

Qs

The Phillips ---------------- matches the data for the U.S. especially well during the--------------- 's (Fill in the blanks)