The simple Phillips curve is consistent with the changes in equilibrium in the aggregate supply and aggregate demand model that occur when the _____ curve shifts.
A) aggregate demand
B) long-run aggregate supply
C) short-run aggregate supply
D) product market demand

Question

Quizplus · Accepted Answer

The simple Phillips curve illustrates the inverse relationship between the rate of inflation (which can be influenced by shifts in the aggregate demand curve) and unemployment. When the aggregate demand curve shifts, it can lead to changes in both inflation and unemployment, consistent with movements along the Phillips curve.

The Simple Phillips Curve Is Consistent with the Changes in Equilibrium