If Inflation Expectations Rise, How Do the Short-Run Phillips Curve

question 146

Multiple Choice

If inflation expectations rise, how do the short-run Phillips curve and unemployment change?

• A) The short-run Phillips curve shifts right, so that at any inflation rate unemployment is higher.
• B) The short-run Phillips curve shifts left, so that at any inflation rate unemployment is higher.
• C) The short-run Phillips curve shifts right, so that at any inflation rate unemployment is lower.
• D) The short-run Phillips curve shifts left, so that at any inflation rate unemployment is lower.

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