AP Macro: Phillips Curve

What is it called when prices rise and output falls

• Inflation
• Deflation
• Recession
• Stagflation

To reduce inflation what must a nation endure?

• High unemployment
• Stagflation
• Recession
• Depression

A to C on the phillips curve is reflected on the aggregate model by which of the following shifts.

• R to Q

• R to M

• N to M

• Q to N

How would a shift from M (green) to N (red) on the aggregate model be shown on the Phillips curve?

• A to C

• Shift the SRPC downward (left)

• Move the Long Run Phillips Curve

• Shift the SRPC upward (right)

• A to B

N(red) to Q (yellow) on the aggregate model is shown on the Phillips Curve as

• A to B

• B to C

• A to C

• C to A

The economy is currently at point Q (yellow) on the aggregate model. If Expansionary Monetary Policy is used to reduce unemployment, how will this change be shown on the Phillips Curve?

• A to C

• Shift the SRPC downward (left)

• Move the Long Run Phillips Curve

• Shift the SRPC upward (right)

• B to A

The economy is currently at point Q (yellow) on the aggregate model. If Expansionary Fiscal Policy is used to reduce unemployment, how will this change be shown on the Phillips Curve?

• A to C

• Shift the SRPC downward (left)

• Move the Long Run Phillips Curve

• Shift the SRPC upward (right)

• B to A

The economy is currently at point Q (yellow) on the aggregate model. If no policy action is made to reduce unemployment, how will this change be shown on the Phillips Curve?

• A to C

• Shift the SRPC downward (left)

• Move the Long Run Phillips Curve

• Shift the SRPC upward (right)

• B to A

According to the short-run Phillips curve, lower inflation rates are associated with

• higher unemployment rates
• higher government spending
• larger budget deficits
• greater labor-force participation rates

With an upward-sloping short-run as curve, an increase in gov. expenditure will most likely

• reduce the price level
• increase real gross domestic product
• shift the short-run aggregate supply curve to the right
• shift both the AD curve and the LRAS curve to the left