an increase in the price of oil shifts the group of answer choices short-run phillips curve right and the unemployment rate falls. short-run phillips curve right and the unemployment rate rises. short-run phillips curve left and the unemployment rate falls. short-run phillips curve left and the unemployment rate rises.

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21-12-2022
Business

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an increase in the price of oil shifts the group of answer choices short-run phillips curve right and the unemployment rate falls. short-run phillips curve right and the unemployment rate rises. short-run phillips curve left and the unemployment rate falls. short-run phillips curve left and the unemployment rate rises.

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Tom056 Tom056 · Answer 1 · 2022-12-24T06:21:28-05:00

An increase in the price of oil shifts the short-run Philips curve right and the unemployment rate rises.

The Philip curve will be shifted to the right, and the unemployment rate will increase. According to the general Philip curve, inflation and unemployment trade off, therefore an increase in predicted inflation will cause a rise in price, and as inflation increases, unemployment decreases. However, a decrease in employment will result from a price increase brought on by an increase in the input, namely oil.

Consider the 1973 Crude Shock. As oil prices rise, inflation and unemployment also move up. It is known as stagflation. Here, the Philip curve diverges.

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