The short-run Phillips curve relationship indicates that
A. an unanticipated increase in aggregate demand lowers the inflation rate but raises the unemployment rate.
B. only an anticipated change in aggregate demand affects the inflation rate or the unemployment rate.
C. an unanticipated increase in aggregate demand raises both the inflation rate and the unemployment rate.
D. an unanticipated increase in aggregate demand raises the inflation rate but lowers the unemployment rate.
Answer: D
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A) about 5 percent B) approximately 15 percent C) 35 percent D) more than 50 percent
Consider the market for portable air conditioners in equilibrium. A summer of unseasonably cool weather would cause
a. both the equilibrium price and quantity to decrease. b. both the equilibrium price and quantity to increase. c. the equilibrium price to increase and the equilibrium quantity to decrease. d. the equilibrium price to decrease and the equilibrium quantity to increase.
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