If the Long-Run Phillips Curve Shifts to the Left, the Economy

question 42

Multiple Choice

If the long-run Phillips curve shifts to the left, the economy will experience a(n) ____ short-run trade-off between inflation and unemployment.

• A)more favourable
• B)less favourable
• C)indeterminate
• D)constant

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Definitions:

Export Subsidy

A government policy to encourage export of goods and discourage sale within the domestic market through direct payments, tax relief for exporters, or subsidizing part of the cost.

Voluntary Export Restriction

An agreement between exporting and importing countries where the exporter voluntarily limits the quantity of goods exported to avoid stronger restrictive measures.

Domestic Equilibrium Prices

Prices of goods and services within a country that are established through the balance of supply and demand without the influence of international trade.

Domestic Quantity Supplied

The amount of a product or service that producers are willing and able to sell within a country's borders at a given price level.