A Rightward Shift of the Traditional Phillips Curve Would Suggest

question 12

Multiple Choice

A rightward shift of the traditional Phillips Curve would suggest that

• A)the productivity of labor increased.
• B)the rate of inflation is now higher at each rate of unemployment.
• C)cost-push inflation decreased.
• D)the rate of inflation is now lower at each rate of unemployment.

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, achieving market balance.

Normal Good

A good for which demand increases as consumer income rises, demonstrating a direct relationship between income and demand.

Allocative Efficiency

Achieved when resources are distributed in a way that maximizes the benefits received by society, aligning production with consumer preferences.

Output Mix

The combination or assortment of different products that a firm produces, reflecting the firm's strategy to meet various consumer demands or market segments.