A ________ the aggregate demand curve is shown as a ________ the short-run Phillips curve.
A) movement along; shift of
B) shift of; movement along
C) shift of; shift of
D) movement along; movement along
E) shift of; rotation of

Question

Quizplus · Accepted Answer

When the aggregate demand curve shifts, it causes a movement along the short-run Phillips curve. This is because a shift in aggregate demand directly affects the level of output and inflation in the short run. However, a shift in the short-run Phillips curve would not directly affect aggregate demand, so the opposite answer (A) is not correct. Both curves shifting simultaneously (C) would suggest a more complex scenario and is not applicable in this context. Movement along both curves together (D) could happen but is less likely, as it would require a simultaneous change in both variables. Rotation of the short-run Phillips curve (E) does not make logical sense in this context.

A ________ the Aggregate Demand Curve Is Shown as a ________

A the Aggregate Demand Curve Is Shown as a