Which of the following would shift the long-run Phillips curve to the right ?
Correct answer: A. An increase in the minimum wage
- A. An increase in the minimum wage
- B. An increase in the expected inflation
- C. An increase in the price of foreign oil
- D. An increase in the aggregate demand
Explanation
A higher minimum wage can raise structural unemployment, increasing the natural rate and shifting the vertical long-run Phillips curve to the right. Expected inflation and oil prices shift the short-run curve, while aggregate demand causes movement along it.
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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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