AP Macroeconomics Question 49: Answer and Explanation
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11. Which of the following results from stagflation?
- A. Unemployment decreases
- B. The price level decreases
- C. The aggregate supply curve shifts to the right
- D. The Phillips curve shifts to the right
- E. Real GDP increases
Correct Answer: D
D Stagflation results from the aggregate supply curve shifting to the left, which increases unemployment and the price level and decreases real GDP. Because unemployment increases for a given inflation rate, the Phillips curve shifts to the right.