Exhibit 14-4 Aggregate supply and demand curves

-As the economy moves to the right in Exhibit 14-4 along the upward-sloping aggregate supply curve the:
A) unemployment rate rises.
B) unemployment rate falls.
C) inflation rate falls.
D) none of the above.

Question

Exhibit 14-4 Aggregate supply and demand curves
 
-As the economy moves to the right in Exhibit 14-4 along the upward-sloping aggregate supply curve the:
A) unemployment rate rises. 
B) unemployment rate falls. 
C) inflation rate falls. 
D) none of the above.

Quizplus · Accepted Answer

As the economy moves to the right in Exhibit 14-4 along the upward-sloping aggregate supply curve, the output and employment levels increase, leading to a decrease in unemployment rate. However, inflation may rise due to increased demand for goods and services. Therefore, the option A and C are incorrect, and the correct answer is B. Option D is also incorrect as the answer has been provided.

Exhibit 14-4 Aggregate Supply and Demand Curves