If the AD curve shifts from year to year and the AS curve does not, then the short run Phillips curve would be

Question

Quizplus · Accepted Answer

When the AD curve shifts from year to year and the AS curve does not, it causes fluctuations in the economy. In the short-run, this leads to movements in both inflation and unemployment. As a result, the short-run Phillips curve is downward sloping, showing an inverse relationship between inflation and unemployment. When AD shifts upwards, it causes inflation to rise and unemployment to fall, leading to a movement down along the short-run Phillips curve. Similarly, when AD shifts downwards, it causes inflation to fall and unemployment to rise, leading to a movement up along the short-run Phillips curve. Therefore, the correct answer is A.

If the AD Curve Shifts from Year to Year and the AS Curve