Asked by Nyasia Green on Jun 10, 2024
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The government of Blenova considers two policies. Policy A would shift AD right by 500 units while policy B would shift AD right by 300 units. According to the short-run Phillips curve, policy A will lead
A) to a lower unemployment rate and a lower inflation rate than policy B.
B) to a lower unemployment rate and a higher inflation rate than policy B.
C) to a higher unemployment rate and lower inflation rate than policy B.
D) to a higher unemployment rate and higher inflation rate than policy B.
Phillips Curve
A financial principle illustrating a reverse correlation between unemployment levels and inflation rates within an economy.
Aggregate Demand (AD)
The total demand for all goods and services within an economy at different price levels, during a specific time period.
Unemployment Rate
The fraction of the working-age population that is currently unemployed and looking for a job.
- Recognize the effects of fiscal and monetary policy on inflation, unemployment, and aggregate demand in the short run.
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Learning Objectives
- Recognize the effects of fiscal and monetary policy on inflation, unemployment, and aggregate demand in the short run.
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