Figure 13-4
-Refer to Figure 13-4.Given the economy is at point A in year 1,what will happen to the unemployment rate in year 2?
A)It will rise.
B)It will fall.
C)It will remain constant.
D)not enough information to answer the question

Question

Figure 13-4 
-Refer to Figure 13-4.Given the economy is at point A in year 1,what will happen to the unemployment rate in year 2?
A)It will rise. 
B)It will fall. 
C)It will remain constant. 
D)not enough information to answer the question

Quizplus · Accepted Answer

Point A is on the Phillips curve, where the unemployment rate is at its natural rate. If the economy moves to the left along the curve to point B in year 2, inflation will be higher but the unemployment rate will also be higher, reflecting a decrease in aggregate demand. Thus, the unemployment rate will rise.

Figure 13-4 -Refer to Figure 13-4.Given the Economy Is at Point a at Point