The Long-Run Phillips Curve Would Shift to the Right If

question 95

Multiple Choice

The long-run Phillips curve would shift to the right if

• A)the money supply growth rate decreased or if labor markets become more flexible.
• B)the money supply growth rate decreased,but not if labor markets become more flexible.
• C)labor markets become more flexible,but not if the money supply growth rate decreased.
• D)None of the above is correct.

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Definitions:

Long-run Phillips Curve

A concept in economics indicating that in the long term, there is no trade-off between inflation and unemployment, represented as a vertical line at the natural rate of unemployment.

Money Supply Growth Rate

The speed at which the quantity of money circulating within an economy is growing.

Unemployment Rate

The proportion of the overall workforce that is not employed but is actively looking for a job and ready to work.

Natural Rate of Unemployment

The long-term rate of unemployment around which the labor market is in balance, reflecting the number of people who are naturally jobless due to factors such as frictional and structural unemployment.