Question

Suppose that the greater availability of online job placement services generates a reduction in frictional unemployment during an interval in which the inflation rate remains unchanged. Would the result be a movement along or a shift of the short-run Phillips curve? Explain your reasoning.

Short answer

As a result,the inflation rate remains steady while the unemployment rate falls.so, the quick Philips curve will move left.

Step-by-step solution

Step: 1 Introduction:

The Philips curve illustrates the inverse link between inflation and unemployment.In other words, the Philips curve depicts the trade-off between inflation and unemployment, i.e., in order to reduce unemployment, a higher inflation rate must be paid, and vice versa.

Step: 2 Short run phillips curve:

When both the rate of inflation and the level of unemployment fluctuate at the same time, motion along the quick Philips curve happens. But at the other extreme, when either the unemployment rate or the annual inflation remain fixed while the other changes, the quick Philips curve shifts.

Step: 3 Movement along short-run phillips curve: 

While the rate of inflation remains unchanged in the aforementioned example, the rate of unemployment is dropping as frictional unemployment decreases.Because the inflation rate remains stable while the unemployment rate falls, the short-run Philip curve will move.More particular, the quick Philips curve will move to the left.