Suppose the Expected Inflation Rate Is 8 Percent and the Unemployment

question 323

Multiple Choice

Suppose the expected inflation rate is 8 percent and the unemployment rate is 3 percent.If the inflation rate rises to 10 percent and the expected inflation rate does not change,

• A) the short-run Phillips curve will shift upward.
• B) the short-run Phillips curve will shift downward.
• C) there will be a movement along the short-run Phillips curve.
• D) the natural unemployment rate will rise.

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