Figure 11.2 -Refer to Figure 11.2..Assume the economy is in equilibrium at Ȳ₁,where real GDP equals potential GDP,and then the economy experiences a positive demand shock.Other things equal,the positive demand shock is best represented by a(n) A) movement up along the Phillips curve. B) movement down along the Phillips curve. C) upward shift of the Phillips curve. D) downward shift of the Phillips curve.

Question

Quizplus · Accepted Answer

A positive demand shock typically leads to higher inflation and lower unemployment, which corresponds to a movement up along the Phillips curve.

Figure 11.2 -Refer to Figure 11.2..Assume the Economy Is in Equilibrium at Is