Refer to Figure 13.7 for the following questions.
Figure 13.7

-Suppose that the economy is at point A on the Phillips curve in Figure 13.7. If the aggregate demand curve shifts to right by the same amount as long-run aggregate supply, then the economy will:
A)remain at point A on the Phillips curve.
B)move to point B on the Phillips curve.
C)move to point C on the Phillips curve.
D)move to point D on the Phillips curve.

Question

Refer to Figure 13.7 for the following questions.
Figure 13.7
 
-Suppose that the economy is at point A on the Phillips curve in Figure 13.7. If the aggregate demand curve shifts to right by the same amount as long-run aggregate supply, then the economy will:
A)remain at point A on the Phillips curve. 
B)move to point B on the Phillips curve. 
C)move to point C on the Phillips curve. 
D)move to point D on the Phillips curve.

Quizplus · Accepted Answer

When the aggregate demand curve shifts to the right by the same amount as the long-run aggregate supply, the overall price level and output increase but the unemployment rate remains unchanged. This scenario keeps the economy at the same point on the Phillips curve, indicating no change in the trade-off between inflation and unemployment.

Refer to Figure 13.7 for the Following Questions