Distinguish between the short-run and long-run Phillips curves. ...

[casperchen82]

Distinguish between the short-run and long-run Phillips curves.
 
  What will be an ideal response?

Question 2

Which of the following is an assumption used when drawing a production possibilities frontier?
 
  i. Human wants and desires are limited to what is available.
  ii. Only two goods are considered.
  iii. The level of technology is fixed and unchanging.
  A) i only
  B) ii only
  C) i and iii
  D) ii and iii
  E) i, ii, and iii

[Zebsrer]

Answer to Question 1

The long-run Phillips curve shows the relationship between inflation and unemployment when the unemployment rate equals the natural rate and the inflation rate equals the expected inflation rate. There is no long-run tradeoff between inflation and unemployment. The short-run Phillips curve, however, shows the relationship between the inflation rate and the unemployment rate when the natural unemployment rate and the expected inflation rate do not change. The short-run Phillips curve is downward sloping, so that it shows a tradeoff between inflation and unemployment.

Answer to Question 2

D

[casperchen82]

Thank you

[Zebsrer]

No problemo