If there is a favorable supply shock which direction does the short-run Phillips curve shift? What initially happens to unemployment and inflation as a result of this shock?
The short-run Phillips curve shifts left. The unemployment rate and the inflation rate both fall.
You might also like to view...
An increase in price:
A. cannot cause a quantity effect. B. cannot cause a price effect. C. causes a decrease in revenue resulting from selling fewer units and a simultaneous increase in revenue resulting from receiving a higher price. D. causes an increase in quantity demanded.
U.S. exports involve an:
A. inflow of foreign currency from foreigners to the U.S. economy. B. outflow of dollars from the United States to foreigners. C. outflow of foreign currency from the United States to foreigners. D. inflow of dollars from foreigners to the U.S. economy.
Refer to Figure 11.3. Assume aggregate demand is represented by AD2 and full-employment output is $5.8 trillion. If aggregate demand decreases by the amount of the AD Excess, equilibrium will occur at
A. Point a. B. Point b. C. Point c. D. Point d.
Which of the following is NOT a common property?
A) a city park B) a main street C) a public beach D) a movie screening