Macro 3.4- The Phillips Curve (Short and Long Run)AP Economics

Mr. Clifford from ACDC Econ explains key macroeconomic graphs, focusing on aggregate demand and supply, and the Phillips curve. He discusses the axes of these graphs, the relationship between inflation and unemployment, and the concepts of inflationary and recessionary gaps. The video also covers the short and long run Phillips curves, and how shifts in aggregate supply affect these curves. The natural rate of unemployment and full employment are also explained.

What are the axes of the aggregate demand and supply graph?

• Price level and real GDP

• Inflation and unemployment

• Interest rate and investment

• Supply and demand

What does the Phillips curve illustrate?

• A negative relationship between inflation and unemployment

• A positive relationship between inflation and unemployment

• A constant relationship between inflation and GDP

• A fluctuating relationship between supply and demand

What happens to inflation and unemployment when aggregate demand increases?

• Inflation increases, unemployment decreases

• Both inflation and unemployment decrease

• Inflation decreases, unemployment increases

• Both inflation and unemployment increase

What is the natural rate of unemployment assumed to be?

• 10%

• 15%

• 5%

• 2%

What occurs when resource prices increase over time due to inflation?

• Aggregate supply shifts to the left

• Aggregate supply shifts to the right

• Aggregate demand shifts to the right

• Aggregate demand shifts to the left