A movement along the SAS curve that brings a lower price level and a decrease in real GDP is equivalent to a
A) movement along a short- run Phillips curve that brings an increase in the inflation rate and an increase in the unemployment rate.
B) shift in the short- run Phillips curve that brings a decrease in the inflation rate and an increase in the unemployment rate.
C) shift in the short- run Phillips curve that brings an increase in the inflation rate and an increase in the unemployment rate.
D) movement along a short- run Phillips curve that brings a decrease in the inflation rate and an increase in the unemployment rate.

Question

Quizplus · Accepted Answer

A movement along the SAS curve represents a change in the price level and real GDP, without any shift in the curve itself. This indicates a movement along the short-run Phillips curve, whereby a decrease in real GDP leads to an increase in unemployment and a decrease in the inflation rate. Therefore, the correct answer is D, where a movement along the short-run Phillips curve brings a decrease in the inflation rate and an increase in the unemployment rate.

A Movement Along the SAS Curve That Brings a Lower