Asked by RMerline Benjamin on Jul 04, 2024

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An improved functioning of the labor markets will shift

A) both the long-run Phillips curve and the long-run aggregate supply curve to the right.
B) both the long-run Phillips curve and the long-run aggregate supply curve to the left.
C) the long-run Phillips curve to the right and the long-run aggregate supply curve to the left.
D) the long-run Phillips curve to the left and the long-run aggregate supply curve to the right.

Labor Markets

The supply and demand for labor, where employers seek to hire workers and workers seek employment, influencing wages and working conditions.

Long-run Phillips Curve

A visual depiction illustrating that over an extended period, there exists no compromise between the rates of inflation and unemployment.

Long-run Aggregate Supply Curve

A curve that shows the relationship between the overall price level and the quantity of output that all firms in an economy are willing to produce, assuming all resources are fully employed.

  • Determine the influence of governmental policies on the natural unemployment rate.
  • Examine the interplay between monetary policy, inflation expectations, and unemployment.
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SG
Satyam GautamJul 08, 2024
Final Answer :
D
Explanation :
An improved functioning of the labor markets increases the efficiency of labor, leading to lower natural rates of unemployment and higher output. This shifts the long-run Phillips curve to the left (indicating lower inflation at any level of unemployment) and the long-run aggregate supply curve to the right (indicating an increase in potential output).