Demand-side policies alone result in which of the following?
A)A shift of the Phillips curve to the left.
B)A movement along the Phillips curve.
C)A shift of the Phillips curve to the right.

Question

Quizplus · Accepted Answer

Demand-side policies, such as fiscal and monetary policy, aim to influence the level of aggregate demand in the economy, which can lead to a movement along the Phillips curve. This is because changes in aggregate demand affect the level of unemployment and inflation in the short run, but do not affect the natural rate of unemployment in the long run. Therefore, demand-side policies cannot shift the Phillips curve to the left or right, which would imply a permanent change in the natural rate of unemployment.

Demand-Side Policies Alone Result in Which of the Following