When an economy experiences a recession there is
A)a leftward shift of the short-run Phillips curve.
B)a downward movement along the short-run Phillips curve.
C)an upward movement along the short-run Phillips curve.
D)a rightward shift of the short-run Phillips curve.
E)no change in the short-run Phillips curve.

Question

Quizplus · Accepted Answer

A recession is a period of economic decline, which is typically characterized by a decrease in output and employment. This decrease in output and employment leads to a decrease in the demand for labor, which in turn leads to a decrease in wages. The decrease in wages shifts the short-run Phillips curve downward.

When an Economy Experiences a Recession There Is