If a Central Bank Had to Give Up Its Discretion

question 106

Multiple Choice

If a central bank had to give up its discretion and had to follow a rule that required it to keep inflation low, how would the Phillips curve shift?

• A) The short-run Phillips curve would shift up.
• B) The short-run Phillips curve would shift down.
• C) The long-run Phillips curve would shift right.
• D) The long-run Phillips curve would shift left.

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