If the Bank of Canada Announced a Policy to Reduce

question 73

Multiple Choice

If the Bank of Canada announced a policy to reduce inflation and people found it credible, what would happen to the short-run Phillips curve and the sacrifice ratio?

• A) The short-run Phillips curve would shift right, and the sacrifice ratio would fall.
• B) The short-run Phillips curve would shift right, and the sacrifice ratio would rise.
• C) The short-run Phillips curve would shift left, and the sacrifice ratio would fall.
• D) The short-run Phillips curve would shift left, and the sacrifice ratio would rise.

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