The Phillips curve is an extension of the model of aggregate supply and aggregate demand because, in the short run, an increase in aggregate demand increases prices and
A) decreases growth.
B) decreases unemployment.
C) increases unemployment.
D) decreases inflation.

Question

Quizplus · Accepted Answer

In the short run, an increase in aggregate demand leads to higher prices and lower unemployment, as firms hire more workers to meet the increased demand for goods and services.

The Phillips Curve Is an Extension of the Model of Aggregate