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- Subject
- The Phillips Curveeconomics-mcqs › the-phillips-curve
- Published
- 27 May 2019
- Last updated
- 28 May 2026
Why is the Phillips curve considered an extension of the aggregate supply and demand model in the short term when aggregate demand rises?
Multiple choice question for The Phillips Curve. Select an option, then review the explanation below.
Explanation
When aggregate demand increases in the short run, prices tend to rise and unemployment typically falls, which is why the Phillips curve builds on the aggregate supply and demand framework.
More The Phillips Curve MCQs
Practice related questions from the same subject.
- 1.What is the likely effect of a credible and announced monetary policy tightening if individuals form rational expectations?
- 2.Refer to Exhibit 6. If the economy is initially at long-run equilibrium at point E, which point will the economy move toward following an unanticipated monetary tightening?
- 3.Refer to Exhibit 6. If the economy is initially at long-run equilibrium at point E, what point will the economy move toward following a sudden rise in government expenditure?
- 4.Based on Exhibit 6, if individuals anticipate a 3% inflation rate and the actual inflation rate is also 3%, at which point is the economy functioning?
- 5.What is the effect of a reduction in the price of imported oil on the short-run Phillips curve?