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 downward movement along the aggregate supply curve
D) A downward movement along the aggregate demand curve
E) An upward movement 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 downward movement along the aggregate supply curve 
D) A downward movement along the aggregate demand curve 
E) An upward movement along the aggregate demand curve

Quizplus · Accepted Answer

An outward shift of the aggregate demand curve would cause a movement along a given Phillips curve (in this case, Phillips curve III) from point A to point B, indicating a decrease in unemployment and an increase in inflation, which is consistent with the relationship depicted by the Phillips curve.

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