AP Macroeconomics Question 49: Answer and Explanation

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Question: 49

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.