If the Actual Inflation Rate Is Equal to the Expected

question 116

Multiple Choice

If the actual inflation rate is equal to the expected rate,which of the following will happen?

• A) inflationary expectations will increase and the Phillips curve will shift downward in the short run.
• B) inflationary expectations will not change and the Phillips curve will remain in its current position in the short run.
• C) inflationary expectations will decrease and the Phillips curve will shift downward in the short run.
• D) inflationary expectations will stay constant and the Phillips curve will shift downward in the short run.
• E) inflationary expectations will not change and the Phillips curve will become horizontal in the short run.

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