Which of the Following Best Explains the Negative Slope of the Short-Run

question 264

Multiple Choice

Which of the following best explains the negative slope of the short-run Phillips curve?

• A)Weak growth in aggregate demand keeps the economy below potential GDP, so unemployment rises but the rate of inflation falls.
• B)Aggregate demand grows so quickly that the inflation rate rises as unemployment rises.
• C)Long-run aggregate supply increases quickly enough that inflation falls as unemployment also falls.
• D)Short-run aggregate supply increases at the same pace as aggregate demand increases so that inflation and unemployment do not change.
• E)Strong growth in technology causes the short-run aggregate supply curve to shift rightward faster than aggregate demand, so unemployment falls and the inflation rate falls.

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Definitions:

Improvement Rate

The pace or degree of enhancement in processes, performance, or productivity over a given period.

Indirect Labour

Workers who support the manufacturing process or service delivery but do not directly contribute to the production of goods or execution of services.

Learning Curves

A graphical representation of how an increase in learning comes from greater experience, leading to reduced costs and increased productivity over time.

Personnel Changes

Alterations in the composition or structure of a workforce, including hiring, firing, promotions, and transfers.