The Phillips curve and the short-run aggregate supply curve are closely related, yet one slopes downward and the other slopes upward. Discuss
The Phillips curve shows the relation between inflation and unemployment. The short-run aggregate-supply curve shows the relation between the price level and output. When aggregate demand increases, the price level and output rise. The rising price level means that inflation has increased. The rising level of output means that firms will hire more workers so that the unemployment rate falls. Thus, the model implies that inflation and unemployment are inversely related as the Phillips curve indicates. Real GDP and the unemployment rate move in the opposite direction. So it is consistent to have an upward sloping aggregate supply curve with output on the horizontal axis and a downward sloping Phillips curve with unemployment on the horizontal axis.
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If the multiplier = 2.5, the MPC would be
A) 0.25. B) 0.4. C) 0.6. D) 0.75.
Which of the following is true about workers who experience structural unemployment?
a. They quickly accept a much lower salary in a different industry. b. They become unemployed due to the business cycle fluctuations. c. They sometimes enter the pool of discouraged workers. d. They tend to quit their job search very easily. e. They usually have the necessary skills to maintain their level of income in another industry.
The U.S. Bureau of Labor Statistics defines the unemployment rate as
a. The percentage of the population who are not working b. The percentage of people who are looking for their first job c. The percentage of workers who lose their jobs d. The percentage of the labor force not employed but actively seeking work in the past 4 weeks
Policies focused on giving people more money in their unemployment checks would be considered
A. monetary policies. B. demand-side and supply-side policies. C. demand-side policies. D. supply-side policies.