Suppose That the Expected Inflation Rate Is 12 Percent and the Unemployment

question 266

Multiple Choice

Suppose that the expected inflation rate is 12 percent and the unemployment rate is 5 percent. If the expected inflation rate increases to 13 percent, then

• 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.