In Recent Years, Inflation Expectations Have Fallen

question 21

Multiple Choice

In recent years, inflation expectations have fallen. How did this shift the short-run Phillips curve, and what are the implications for unemployment?

• A) This shifted the short-run Phillips curve left, meaning that at any given inflation rate, unemployment will be lower in the short run than before.
• B) This shifted the short-run Phillips curve right, meaning that at any given inflation rate, unemployment will be lower in the short run than before.
• C) This shifted the short-run Phillips curve right, meaning that at any given inflation rate, unemployment will be higher in the short run than before.
• D) This shifted the short-run Phillips curve left, meaning that at any given inflation rate, unemployment will be higher in the short run than before.

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