AP Macroeconomics : Phillips Curve and Inflation Quiz

Quiz
*Theme/Title:	Phillips Curve and Inflation
* Description/Instructions
The Short-Run Phillips Curve, SRPC, shows the relationship between inflation and unemployment. It is negatively sloped to show that when unemployment is high, inflation is low. The Long-Run Phillips Curve, LRPC, is vertical at the natural rate of unemployment. Equilibrium along the Phillips Curve is where SRPC = LRPC. Like every curve in Macroeconomics, the forces that move the Phillips Curves are unseen. Changes in Fiscal and Monetary Policy along with other exogenous changes can move the economy along the SRPC or shift the curve. For example, any increase in aggregate demand is a movement along the SRPC. When analyzing which direction to move the SRPC, look at the ASAS. If the SRAS moves to the right, then the SRPC moves to the left. Inflation is defined as a general rise in the price level. That means that some prices may be rising and some prices may be falling, but the general price level as measured by the CPI is increasing. The inflation rate is the change in the CPI.
Group:	AP Macroeconomics AP Macroeconomics Quizzes
Topic:	AP Macroeconomics

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