The figure given below shows the Phillips curves of the U.S. economy during early 1960s to late 1970s.
Figure 14.2

-Refer to Figure 14.2. If the natural rate of unemployment is 5 percent, which of the following would cause a movement along Phillips curve III from point A to point B?
A) An inward shift of the aggregate demand curve
B) An outward shift of the aggregate demand curve
C) A movement down along the aggregate supply curve
D) A movement down along the aggregate demand curve
E) A movement up along the aggregate demand curve

Question

The figure given below shows the Phillips curves of the U.S. economy during early 1960s to late 1970s.
Figure 14.2
 
-Refer to Figure 14.2. If the natural rate of unemployment is 5 percent, which of the following would cause a movement along Phillips curve III from point A to point B?
A) An inward shift of the aggregate demand curve 
B) An outward shift of the aggregate demand curve 
C) A movement down along the aggregate supply curve 
D) A movement down along the aggregate demand curve 
E) A movement up along the aggregate demand curve

Quizplus · Accepted Answer

A movement along the Phillips curve from point A to point B typically indicates a change in inflation and unemployment due to a shift in aggregate demand. An outward shift of the aggregate demand curve would increase inflation and decrease unemployment, causing such a movement.

The Figure Given Below Shows the Phillips Curves of the U.S