Asked by Landon Johnson on Jul 04, 2024
Verified
The short-run Phillips curve is based upon labor contracts that reflect a given expected _____.
A) price level
B) unemployment level
C) money supply
D) aggregate demand
E) unemployment rate
Expected Price Level
The anticipated average of prices for all goods and services in an economy over a future period.
Labor Contracts
Agreements between employers and employees or unions that define terms of employment, salaries, benefits, and working conditions.
- Comprehend the basis of the short-run Phillips curve and its implications for inflation and unemployment.
Verified Answer
PH
Phoenix HinesJul 05, 2024
Final Answer :
A
Explanation :
The short-run Phillips curve is based upon labor contracts that reflect a given expected price level, which means that workers and firms expect a certain level of inflation when they negotiate wages. Therefore, changes in actual inflation relative to expected inflation can affect unemployment in the short run.
Learning Objectives
- Comprehend the basis of the short-run Phillips curve and its implications for inflation and unemployment.