Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question

Transcribed Image Text:%
Real
Growth in Unemployment Inflation
Year GDP Real GDP Rate
Rate
1980 5,839 -.2
7.1
13.5
1981 5,987 2.5
7.6
10.3
1982 5,870 -2.0
9.7
6.2
Which of the following terms accurately describe ALL
of the years on the chart above?
Stagflation
O Full Employment
Expansion
Recession
Expert Solution

Step 1
Inflation and unemployment are the trade-offs that would result in a rise in inflation with a fall in unemployment. The Philips curve would result in the trade-off between inflation and unemployment.
The economy having an increase in output is the expansion, and a fall in output is called the recession. The economy would have a rise in output and price in expansion and vice versa in recession.
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