As the economy moves down and to the left along a short-run aggregate supply curve, it:
A)moves up and to the right along the short-run Phillips curve.
B)moves up and to the left along the short-run Phillips curve.
C)moves down and to the left along the short-run Phillips curve.
D)moves down and to the right along the short-run Phillips curve.

Question

As the economy moves down and to the left along a short-run aggregate supply curve, it:
A)​moves up and to the right along the short-run Phillips curve.
B)​moves up and to the left along the short-run Phillips curve.
C)​moves down and to the left along the short-run Phillips curve.
D)​moves down and to the right along the short-run Phillips curve.

Quizplus · Accepted Answer

As the economy moves down and to the left along a short-run aggregate supply curve, there is a decrease in output level and an increase in the price level. This leads to a movement down and to the right along the short-run Phillips curve, as unemployment decreases and inflation increases. Therefore, the best choice is D.

As the Economy Moves Down and to the Left Along