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Homework answers / question archive / If the AS curve shifts from year to year, but the AD curve does not, then the Phillips curve would show A

If the AS curve shifts from year to year, but the AD curve does not, then the Phillips curve would show A

Economics

If the AS curve shifts from year to year, but the AD curve does not, then the Phillips curve would show A. a negative relationship between the inflation and unemployment rates. B. a positive relationship between the inflation and unemployment rates. C. a constant trade-off between the inflation and unemployment rates. D. no particular relationship between the inflation and unemployment rates.

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Option B.

  • The Philips curve shows that the inflation rate and unemployment rate are negatively related to each other.
  • This is because when the inflation rate increases within the Economy, the output produced and supplied within the economy Increases.
  • This will lead to a fall in the unemployment rates. But if the supply keeps varying when the demand is constant, then the unemployment rate would start to rise even when Inflation rate rises.

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