What is the Phillips curve? Explain the difference in movements ...

[big1devin]

What is the Phillips curve? Explain the difference in movements along the Phillips curve and shifts in the Phillips curve, and explain what can cause these movements and shifts.
 
  What will be an ideal response?

Question 2

The Beveridge curve shifted outward during what period?
 
  A) during the Great Depression.
  B) during the Great Moderation.
  C) after January 2008.
  D) between January 2000 and December 2007.

[ultraflyy23]

Answer to Question 1

The Phillips curve is a graph which shows the relationship between the unemployment rate and the inflation rate. Movements along the Phillips curve can be caused by demand shocks, where positive demand shocks cause the inflation rate to increase and the unemployment rate to decrease, and negative demand shocks cause the inflation rate to decrease and the unemployment rate to increase. Shifts in the Phillips curve are caused by changes in the expected inflation rate and by supply shocks. Negative supply shocks and increases in the expected inflation rate cause the Phillips curve to shift up, and positive supply shocks and decreases in the expected inflation rate cause the Phillips curve to shift down.

Answer to Question 2

C

[big1devin]

Thank you

[ultraflyy23]

No problemo