"As the economy moves upward along its aggregate supply curve, the economy also moves upward along its short-run Phillips curve." Is the previous statement correct or incorrect? Briefly explain your answer
What will be an ideal response?
The statement is correct. As the economy moves upward along its aggregate supply curve, the price level rises so that there is inflation. And as the economy moves upward along its aggregate supply curve, real GDP increases so that the unemployment rate decreases. Therefore moving upward along the aggregate supply curve is associated with inflation and lower unemployment, which is what we see when we move along the short-run Phillips curve.
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For a given domestic and foreign price level, an increase in the nominal exchange rate ________ the real exchange rate.
A. offsets any change in B. may either increase or decrease C. increases D. decreases
Which of the following is a question answered with normative economic reasoning?
A) If the college provided less financial aid for out-of-state students, would more in-state students benefit? B) If the college offers free textbooks for students, will more students read their textbooks? C) If the college increased its enrollment requirements, would class size decline? D) Should the college increase tuition to fund its athletic programs?
M1
A) is the sum of currency plus traveler's checks. B) is the narrowest definition of the money supply. C) includes credit cards. D) includes small time deposits.
Two reasons why valuing goods at their market prices is different than valuing them at their factor costs include
A) depreciation and investment. B) exports and imports. C) personal taxes and corporate taxes. D) indirect taxes and subsidies.