Suppose output is $35 billion, government purchases are $10 billion, desired consumption is $15 billion, and desired investment is $6 billion. Desired savings is equal to

Refer to Figure 17-3. The shifts shown in the short-run and long-run Phillips curves between period 1 and period 2 could be explained by

A) an increase in the natural rate of unemployment from 5.5 to 6.8 percent. B) an increase in the expected inflation rate from 4.0 to 5.5 percent. C) either an increase in expected inflation from 4.0 to 5.5 percent or an increase in the natural rate of unemployment from 5.5 to 6.8 percent. D) None of the above is correct.

Supply-side policy suggests that if we _______ taxes of workers, the _________ labor will increase, causing equilibrium wages to ________.

A. raise, supply of, decrease B. cut, supply of, increase C. raise, demand for, increase D. cut, supply of, decrease