Phillips curve test
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