Lower unemployment and lower inflation?

Question

Lower unemployment and lower inflation can best be achieved with:
A) A rightward shift of the Phillips curve
B) A rightward shift of the aggregate supply curve
C) A rightward shift of the aggregate demand curve
D) None of the above.

I am leaning towards A because the Phillips curve involves both of the things. I am just not sure it would shift right.

Answer 1

A rightward shift in the Phillips curve would cause higher unemployment and the same rate of inflation (think about the shape of the curve).

A rightward shift of aggregate supply would cause a new equilibrium at a lower price level and an increased real national output. The lower price level would mean lower (even negative) inflation, and the higher output would mean more jobs are created and unemployment is reduced.

So; B)

I hope that helps.

Answer 2

Let's look at each option.

A) A rightward shift would imply higher inflation and higher unemployment. Next time make yourself a graph and look at it, it will help a lot.

B) In order to move right, you must increase supply. Increasing supply requires more employees. Increasing supply without changing demand requires dropping the price to get people to buy it, hence lower price increases over the entire system and hence lower inflation.

C) A rightward shift of the demand curve, without a change in the supply curve implies more will be demanded, hence higher prices and therefore more inflation, but no additional employment since the firm would lose profits by producing extra and dropping prices.

Answer 3

Employment is without doubt certainly one of the factors related to inflation, yet there are others besides. the dimensions of the money grant is likewise a ingredient, it relatively is definitely desperate with the help of the interest value set with the help of the Federal Reserve. the point of productiveness is yet another ingredient, which has lots to do with the cost of imposing automation of the artwork ecosystem. Disruptions interior the production chain such at exertions disputes, increasing transportation costs etc. interior the case of food, it relatively is inspite of each thing a touch super chuck of the economic device, the climate could have a brilliant effect on inflation. government spending on non-effective activities which includes war is a ingredient. i'm particular there are extra oftentimes going on factors and there is the very genuine probability that no longer even extremely clever economists have all of it found out.

Answer 4

d,