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Author Question: Compare and contrast the shapes of the short-run and long-run Phillips ... (Read 74 times)

jhjkgdfhk

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on: Jun 30, 2018
Compare and contrast the shapes of the short-run and long-run Phillips curves.

Question 2

Globalization had to be put into effect to revive developed economies after the financial crises of the 1990s.
 a. True
  b. False
  Indicate whether the statement is true or false


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s.meritte

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Reply #1 on: Jun 30, 2018
Answer to Question 1

The short-run Phillips curve is downward sloping, showing that attempting to reduce unemployment carries a price: higher inflation. The short-run curve traces out points as aggregate demand shifts and intersects aggregate supply at different points. An increase in AD results in lower unemployment but higher inflation. The long-run Phillips curve is vertical, implying that the economy tends toward full employment regardless of the price level. The long-run curve reflects built-in stability of the economy. Taking the case of an increase in AD, the higher price level leads to higher wages, thus decreasing short-run AS. The long-term effect of an increase in AD is a higher price level associated with the natural rate of unemployment.

Answer to Question 2

False


jhjkgdfhk

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Reply 2 on: Jun 30, 2018
Excellent

mammy1697

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Reply 3 on: Yesterday
:D TYSM

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