In a self-regulating economy, inflationary and recessionary gaps produce shifts of the
A) AD curve that maintain the short-run equilibrium point.
B) AD curve that move the economy to a long-run equilibrium point.
C) SRAS curve that maintain the short-run equilibrium point.
D) SRAS curve that move the economy to a long-run equilibrium point.
D
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If the unemployment rate in the economy is steady at 4 percent per year, how does the short-run Phillips curve predict that the inflation rate will be changing, if at all? What will happen if the unemployment rate now rises to 7 percent per year?
Assume there are no changes to inflation expectations. Provide an appropriate graph to support your discussion.
Which factor would cause a movement along the demand curve for pizza?
A) an increase in the number of students in town B) a renewed preference for Italian food C) a drop in the price of pizza D) an increase in average income