An Increase in Expected Inflation Would Cause a Phillips Curve

question 11

Multiple Choice

An increase in expected inflation would cause a Phillips curve drawn with the inflation rate measured along the vertical axis to

• A) shift to the right by an amount equal to the increase.
• B) shift to the left by an amount equal to the increase.
• C) shift down by an amount equal to the increase.
• D) shift up by an amount equal to the increase.
• E) shift up and to the right by an amount equal to the increase measured along a 45-degree line from the origin.

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Definitions:

Average Revenue

The revenue a company generates per unit of output sold, calculated by dividing total revenue by the number of units sold.

Perfectly Elastic Demand Curve

A demand curve with infinite elasticity, where consumers are willing to purchase any amount of a product at a certain price, but none at any slightly higher price.

Output

Refers to the total amount of goods or services produced by an individual, firm, or country within a specific period.

Firm

A business organization, such as a corporation or partnership, that sells goods or services for profit.