Mr. Clifford reviews the Phillips Curve, explaining its role in depicting economic states: recessionary gap, inflationary gap, and full employment. The short-run Phillips Curve is downward sloping, while the long-run curve is vertical. The video discusses how shifts in aggregate demand and supply affect the curve, illustrating these changes with graphs. It also covers the long-run adjustments in the economy, such as wage and resource price increases, and their impact on the Phillips Curve.

What does the Phillips Curve illustrate in the short run?

• A horizontal line

• A downward sloping curve

• An upward sloping curve

• A vertical line

Which of the following is considered full employment in terms of unemployment rate?

• 5% unemployment

• 2% unemployment

• 0% unemployment

• 10% unemployment

In a recessionary gap, what is the relationship between unemployment and inflation?

• Low unemployment and high inflation

• High unemployment and high inflation

• Low unemployment and low inflation

• High unemployment and low inflation

What happens to the Phillips Curve when aggregate supply shifts to the left?

• There is movement along the curve

• The curve shifts to the right

• The curve becomes horizontal

• The curve shifts to the left

What is the long-term effect on wages and resource prices when there is inflation?

• They increase

• They decrease

• They remain constant

• They fluctuate randomly