Refer to the information provided in Figure 14.5 below to answer the questions that follow.
Figure 14.5
-Refer to Figure 14.5.If aggregate demand shifts while aggregate supply is stable,the relationship between the price level and the unemployment rate is represented in Panel

Question

Refer to the information provided in Figure 14.5 below to answer the questions that follow.
  Figure 14.5
-Refer to Figure 14.5.If aggregate demand shifts while aggregate supply is stable,the relationship between the price level and the unemployment rate is represented in Panel

Quizplus · Accepted Answer

Panel A shows the traditional relationship between the price level and unemployment rate in the short run. If aggregate demand shifts while aggregate supply is stable, it will cause a movement along the short-run aggregate supply curve, resulting in a higher price level and lower unemployment rate.

Refer to the Information Provided in Figure 14