-In the figure above, draw a short-run Phillips curve and a long-run Phillips curve if the expected inflation rate is 4 percent and the natural unemployment rate is 6 percent. Explain how the two change in the short run if:
a) slower growth in aggregate demand causes a recession.
b) the inflation rate increases.
c) the natural unemployment rate increases.
Definitions:
Divergent Thinking
A thought process used to generate creative ideas by exploring many possible solutions and approaches.
MA/CA × 100
A formula used to calculate the Mental Age (MA) divided by the Chronological Age (CA), multiplied by 100, often used in intelligence testing.
Theory of Multiple Intelligences
A theory proposed by Howard Gardner, suggesting that individuals have various kinds of intelligences, such as linguistic, logical-mathematical, and spatial.
Gardner
Refers to Howard Gardner, an American developmental psychologist best known for his theory of multiple intelligences.
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