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The Short-Run Phillips Curve (SRPC) shows a trade-off between inflation and unemployment. The Long-Run Phillips Curve (LRPC) is vertical at the natural rate of unemployment, showing no long-run trade-off. Policy can move along the SRPC, but the economy returns to the LRPC in the long run.
Ultimate Flashcard Review
Video
Phillips Curve and AD-AS Graph (AD Shifts)
Key Concepts to Understand
Question 1 of 3
Which of the following will lead to an upward movement along the short-run Phillips Curve?
A decrease in net exports
An increase in personal income taxes
The purchase of government bonds by the central bank
A sudden increase in input prices
Practice Questions: Test Your Understanding
Apply what you've learned with these practice questions. These questions test your understanding of the key concepts.
Question 1 of 3
An increase in aggregate demand that causes inflation will, in the short run, lead to which of the following on a standard Phillips curve diagram?
A movement upwards along the short-run Phillips curve (SRPC)
A movement downwards along the short-run Phillips curve (SRPC)
A rightward shift of the short-run Phillips curve (SRPC)
A leftward shift of the short-run Phillips curve (SRPC)
A rightward shift of the long-run Phillips curve (LRPC)
Key Takeaways
- 📊Master the fundamentals: Understanding these core concepts is essential for success in AP Economics.
- ✅Practice makes perfect: Use the interactive exercises and practice questions to reinforce your understanding.