An Increase in the Natural Rate of Unemployment Shifts the Short-Run

question 91

Short Answer

An increase in the natural rate of unemployment shifts the short-run Phillips curve to the _____. If the central bank sees the increase in the unemployment rate, but thinks the natural rate has remained the same and so wants to reduce unemployment, it would ________ the money supply growth rate. If it maintains this money supply growth rate, eventually the short run Phillips curve will shift _____ and unemployment will be _____.

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Definitions:

Typical Welfare

Governmental support programs designed to assist individuals or families in meeting basic needs, such as food, shelter, and healthcare.

Family

A social unit consisting of individuals related by blood, marriage, or other forms of partnership and commitment.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Economic Rent

It is the payment to an owner or factor of production in excess of the costs needed to bring that factor into production. In other words, it's the extra income earned from a resource without investing in additional effort or cost.