Phillips curve test

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If policy makers expand AD then in the long run

Prices will be higher and unemployment will be unchanged

If policy makers decrease AD then in the long run

Prices will be lower and unemployment will be unchanged

Unemployment would decrease and prices would increase if

AD shifted to the right

In the long run, if the Fed increases the rate at which it increases money supply

Inflation will be higher

The natural rate of unemployment

Is the unemployment rate that the economy tends to move to in the long run

In the long run policy that changes AD changes

Only price level

If the central bank increases the money supply in the short run prices will... and unemployment will...

Rise and unemployment will fall

If the government raises government expenditures in the short run prices will... and unemployment will...

Rise and unemployment will fall

If policy makers decrease AD the price level will... and unemployment will....

Rise as unemployment falls

The economy will move to a point on the short run Phillips curve where unemployment is lower if

The government increases expenditures

In the long run inflation rate depends on

The money suply growth rate

In the short run, policy that changes AD changes two things

Unemployment and price level

Short run trade off between....

inflation and unemployment


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