The Phillips curve shows that, in the short-run:- **A.** Expected changes in aggregate demand produce a positive relationship between inflation and unemployment.- **B.** Unexpected changes in aggregate demand produce a positive relationship between inflation and unemployment.- **C.** Expected changes in aggregate demand produce an inverse relationship between inflation and unemployment.- **D.** Unexpected changes in aggregate demand produce an inverse relationship between inflation and unemployment.

Philips curve is downward sloping that shows relationship between inflation rate and unemployment rate.Unexpected changes in aggregate demand shows inverse relationship between inflation rate and unemployment rate. Unexpected increase in aggregate demand leads to increase in price level and output. This implies inflation rate increases and unemployment decreases. Unexpected decrease in aggregate demand leads to decrease in price and output. This implies inflation rate decreases and unemployment rate increases. Correct - D. unexpected changes in aggregate demand produce an inverse relationship between inflation and unemployment.

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The Phillips curve shows that, in the short-run: O A. expected changes in aggregate demand produce a positive relationship between inflation and unemployment. O B. unexpected changes in aggregate demand produce a positive relationship between inflation and unemployment. OC. expected changes in aggregate demand produce an inverse relationship between inflation and unemployment. O D. unexpected changes in aggregate demand produce an inverse relationship between inflation and unemployment.

The Phillips curve shows that, in the short-run: O A. expected changes in aggregate demand produce a positive relationship between inflation and unemployment. O B. unexpected changes in aggregate demand produce a positive relationship between inflation and unemployment. OC. expected changes in aggregate demand produce an inverse relationship between inflation and unemployment. O D. unexpected changes in aggregate demand produce an inverse relationship between inflation and unemployment.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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For this question, assume that the expected rate of inflation is a function of past year's inflation. Also assume that the unemployment rate has been equal to the natural rate of unemployment for a number of years. Given this information, we know that: Select one: O a. the rate of inflation should steadily decrease. O b. the rate of inflation will approximately be equal to zero. O c. the rate of inflation should neither increase nor decrease. O d. the rate of inflation should steadily increase over time. O e. the inflation rate will be approximately equal to the natural rate of unemployment.
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QUESTION 8 If expected inflation is 3%, then the real interest rate is O A. 3% B. 0% O C. 1% O D. There is not enough information to answer this question
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