Understanding the Philips Curve

What does the short-run Philips Curve illustrate?

• A constant rate of inflation

• An inverse relationship between inflation and unemployment

• No relationship between inflation and unemployment

• A direct relationship between inflation and unemployment

What happens to the Philips Curve when aggregate demand increases?

• It becomes vertical

• It shifts to the right

• It shifts to the left

• It remains unchanged

In the context of the Philips Curve, what characterizes a recessionary gap?

• High inflation and low unemployment

• Low inflation and high unemployment

• High inflation and high unemployment

• Low inflation and low unemployment

What is the result of a leftward shift in aggregate supply on the Philips Curve?

• Higher inflation and lower unemployment

• Lower inflation and higher unemployment

• Higher inflation and higher unemployment

• Lower inflation and lower unemployment

How does a shift in aggregate supply affect the short-run Philips Curve?

• It causes the curve to become horizontal

• It has no effect on the curve

• It results in a shift of the entire curve

• It causes the curve to become vertical