If the short-run Phillips curve shifts rightward, what happens to the tradeoff between inflation and unemployment? If the short-run Phillips curve shifts leftward, what happens to the tradeoff between inflation and unemployment?
What will be an ideal response?
A rightward shift of the short-run Phillips curve worsens the tradeoff between inflation and unemployment. With the rightward shift, a given level of inflation is now associated with a higher unemployment rate, or stated another way, a given unemployment rate is now associated with a higher inflation rate. A leftward shift of the short-run Phillips curve improves the tradeoff between inflation and unemployment. With the leftward shift, a given level of inflation is now associated with a lower unemployment rate, or stated another way, a given unemployment rate is now associated with a lower inflation rate.
You might also like to view...
The rate at which a consumer must give up y to get one more x is equal to
A) -Px/Py. B) -Py/Px. C) -MUx/MUy. D) MUy/MUx.
In the classical model, fiscal policy is both ineffective and unnecessary
a. True b. False
This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market.PriceQuantityTC$500$10.00$501$20.00$502$27.50$503$77.50$504$147.50$505$250.00According to the table shown, the firm's marginal revenue:
A. decreases as output increases. B. increases until the 3rd unit, then decreases. C. increases as output increases. D. is constant.
Consider the factors that affect bond demand and bond supply. Describe how the following are likely to change during a period of robust economic growth: wealth, default risk, and general business conditions. For each, state how the factor is likely to change, and discuss the implications for bond demand/supply, bond price, and yield. Bond prices tend to decrease during periods of high economic growth. What does this reveal about which of these factors is important?
What will be an ideal response?