Faster Job Matching
The question
Assume the economy of Belmore is operating at its natural rate of unemployment with fully anticipated, stable inflation. A widely adopted online job-search platform sharply reduces the time it takes unemployed workers to find positions that match their skills. Show the complete long-run effect of this change in the Phillips curve model, assuming inflation expectations are unchanged. Show the effect on the Phillips Curve graph.
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Faster Job Matching: the worked answer
On the Phillips Curve graph, LRPC shifts left and SRPC shifts down (left).
Why LRPC shifts left and SRPC shifts down (left)
Faster job matching reduces frictional unemployment, which lowers the natural rate of unemployment. The long-run Phillips curve is vertical at the natural rate, so it shifts left to the new, lower natural rate. With inflation expectations unchanged, the short-run Phillips curve also shifts left so that it intersects the new long-run Phillips curve at the same expected inflation rate, re-anchoring the entire model at the lower natural rate.
What happens to the equilibrium
The economy can sustain a permanently lower unemployment rate at an unchanged rate of inflation.
The mistake students make on this one
Students often move the SRPC on its own and leave the vertical curve where it is, treating easier job search as if it were a fall in expected inflation. Faster matching lowers frictional unemployment, and frictional unemployment is part of the natural rate itself, so the vertical LRPC has to relocate.
On exam day
Ask whether the event changes how long job search takes or how well workers and openings fit each other. If it does, the natural rate moved, so the vertical LRPC must move and the whole model re-anchors on the new rate.
How this is graded
The checker reads every curve's position before and after your answer. You are marked correct only when LRPC shifts left and SRPC shifts down (left) and every other curve on the Phillips Curve graph stays where it started — the same standard an AP reader applies to a drawn graph: the right shift, and nothing extra. There is no AI involved; the rubric is the geometry.
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