Asked by Katherine Broussard on Jun 29, 2024
Verified
An adverse supply shock shifts the short-run Phillips curve right and the short-run aggregate-supply curve left.
Adverse Supply Shock
A situation where the supply of goods decreases suddenly, leading to higher prices and lower quantities available.
Short-Run Aggregate-Supply Curve
Depicts the relationship between the price level and the quantity of goods and services that firms are willing to produce, taking some inputs as fixed.
Short-Run Phillips Curve
A graphical representation that shows the inverse relationship between short-term inflation and unemployment rates, suggesting a trade-off.
- Grasp the effects of supply shocks on inflation, unemployment, and the aggregate supply curve.
- Decode the essence of the Phillips curve in terms of its short and long-term implications.
Verified Answer
Learning Objectives
- Grasp the effects of supply shocks on inflation, unemployment, and the aggregate supply curve.
- Decode the essence of the Phillips curve in terms of its short and long-term implications.
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