Discuss the following statements.

a. The Phillips curve implies that when an economy is operating below full capacity, a significant increase in aggregate demand is likely to cause a reduction in unemployment and an increase in inflation.

b. Monetary policy is quite important in determining the level of employment because the key connection or link between interest rate increases and lower price inflation is the pace at which wages are apt to increase during tight labor markets.

c. During the global financial crisis when the price level was negative, employers resisted cuts in wages and salaries.