In Figure B above, which of the following are being held constant while moving along the curve in the figure?
A) the expected inflation rate
B) the natural unemployment rate
C) the AD curve
D) Both answers A and B are correct.

Question

Quizplus · Accepted Answer

The figure shows a Phillips curve, which shows the inverse relationship between unemployment and inflation. As we move along the curve, the expected inflation rate and the natural unemployment rate are both held constant. The AD curve, on the other hand, represents the level of aggregate demand at different price levels and can shift depending on various factors such as changes in consumer confidence or government spending. Therefore, the correct answer is D, as both A and B are being held constant while moving along the curve.

In Figure B Above, Which of the Following Are Being