Figure 24-4

-Refer to Figure 24-4. Given the economy is at point A in year 1,the unemployment rate will ________ and the price level will ________ in year 2.
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall

Question

Figure 24-4
 
-Refer to Figure 24-4. Given the economy is at point A in year 1,the unemployment rate will ________ and the price level will ________ in year 2.
A) rise; rise 
B) rise; fall 
C) fall; rise 
D) fall; fall

Quizplus · Accepted Answer

Based on the Phillips curve model shown in the graph, if the economy is at point A in year 1 (which indicates a relatively low unemployment rate and a relatively high price level), the Phillips curve suggests that in year 2 the unemployment rate will increase while the price level will also increase. Therefore, the answer is A) rise; rise.

Figure 24-4 -Refer to Figure 24-4. Given the Economy Is at Point