The Phillips curve is an extension of the model of aggregate supply and aggregate demand because, in the short run, an increase in aggregate demand increase price and ?
Correct answer: A. decreases unemployment
- A. decreases unemployment
- B. decrease growth
- C. increases unemployment
- D. decreases inflation
Explanation
In the short run, stronger aggregate demand raises both the price level and real output. Higher output increases firms' demand for labour, so unemployment falls.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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