in the graph of the phillips curve shown here, an economy moved from point 1 to point 2 to point 3. which of…

in the graph of the phillips curve shown here, an economy moved from point 1 to point 2 to point 3. which of the following would best represent the movement from point 2 to point 3 shown in the graph? choose 1 answer: a an increase in aggregate demand (ad) b a decrease in aggregate demand (ad) c an increase in short - run aggregate supply (sras) d an increase in the natural rate of unemployment e a decrease in short - run aggregate supply (sras)

in the graph of the phillips curve shown here, an economy moved from point 1 to point 2 to point 3. which of the following would best represent the movement from point 2 to point 3 shown in the graph? choose 1 answer: a an increase in aggregate demand (ad) b a decrease in aggregate demand (ad) c an increase in short - run aggregate supply (sras) d an increase in the natural rate of unemployment e a decrease in short - run aggregate supply (sras)

Answer

Brief Explanations:

The movement from point 2 to point 3 on the Phillips - curve graph shows a decrease in the inflation rate and no change in the unemployment rate at the natural rate. A decrease in aggregate demand (AD) shifts the short - run Phillips curve (SRPC) downwards along the long - run Phillips curve (LRPC), leading to lower inflation with the unemployment rate remaining at the natural rate. An increase in AD would increase inflation. Changes in short - run aggregate supply (SRAS) affect the SRPC differently, and an increase in the natural rate of unemployment would shift the LRPC.

Answer:

B. A decrease in aggregate demand (AD)