Suppose the Long-Run Phillips Curve Shifts to the Right

question 64

Multiple Choice

Suppose the long-run Phillips curve shifts to the right. For any given rate of money growth and inflation, how would unemployment and output change?

• A) Unemployment would be higher, and output would be lower.
• B) Unemployment would be higher, and output would be higher.
• C) Unemployment would be lower, and output would be lower.
• D) Unemployment would be lower, and output would be higher.

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Definitions:

Conforming

The act of aligning one's attitudes, beliefs, and behaviors with group norms or expectations.

National Norms

Refer to the shared expectations and rules that guide behavior of people within a nation, shaping social and cultural norms.

Social Norms

The implicit or explicit rules a group has for the acceptable behaviors, values, and beliefs of its members.

Compliance

Conformity to a social norm prompted by the desire to acquire rewards or avoid punishment.