Question

The relationship between short-run aggregate supply curves and Phillips curves is that there: a) are several short-run aggregate supply curves for each Phillips curve. b) is exactly one Phillips curve corresponding to each short-run aggregate supply curve. c) are several Phillips curves for each short-run aggregate supply curve. d) is no relationship between short-run aggregate supply curves and Phillips curves.

Answer 1

The relationship between short-run aggregate supply curves and Phillips curves is that there several Philips curves for one short run aggregate supply curve.

Option c

Explanation:

Philips curve is defined as a graphical model that is used to explain the relation between unemployment and inflation using a combination of 2 curves, namely the short run and long run Phillips curve models. A short run aggregate supply curve is a special type of aggregate supply curve shaped like an upward sloping graph since the quantity supplied by a company is seen to increase as the price rises.

When we see the relation between the short run aggregate supply curve and the Philips curve, we see that a change in the SRAS (short run aggregate supply) leads to a change in the whole model of the Philips curve, thus it leads to multiple Philips curves existing for a single SRAS curve.