Question

1.
Distinguish between short run phillips curve and
long run phillips curve through an appropriate
diagram. Explain why the shape of the phillips
curve is different in the short run and long run.​

Answer 1

Answer:

The correct answer is

The long-run Phillips curve could be a vertical line that illustrates that there's no permanent trade-off between inflation and unemployment within the future. However, the short-run Phillips curve is roughly L-shaped to reflect the initial inverse relationship between the 2 variables.

Explanation:

• The Philips curve signifies the connection that exists between rate of severance and affectation.
• The Phillips curve given by A.W.
• Phillips shows that there live an inverse relationship between the speed of severance and therefore the rate of increase in nominal stipend.
• Within the short run, a rise in Aggregate Demand does move the frugality up to the left along the short- run Phillips curve. Affair and affectation increase while severance diminishments.
• Over the long run, still, affectation prospects increase and workers not work the redundant hours because they realize that real stipend haven't increased with the rise in prices. Affair returns to the identical position as ahead but affectation is advanced because it's erected into the system in terms of advanced affectation prospects.
• The future Phillips curve, thus, is perpendicular.

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Answer 2

Answer:

Here the question given has two parts, one to find the differences and the second is to explain the given statement.

Explanation:

The differences between the short-run Phillips curve and the long-run Phillips curve are:

The long-run Phillips curve could be a vertical line in the diagram which shows that there's no permanent trade-off between inflation and unemployment in the future. And the short-run Phillips curve is roughly L-shaped to reflect the initial inverse relationship between the 2 variables in the diagram.

The explanation for why the shape of the Phillips curve is different in the short run and long run.​

Phillips curve shows the trade-off between inflation and unemployment in an economy. So, from the Keynesian theory, the Phillips curve should slope downward so that higher unemployment refers to a lower inflation rate and vice versa. therefore in this, unemployment will be low but there will be an inflationary rise in the price level are a concern.

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