What Happens to the Phillips Curve When Future Inflation Is

question 30

Multiple Choice

What happens to the Phillips curve when future inflation is expected to rise?

• A) The curve shifts to the right.
• B) The curve shifts to the left.
• C) The curve becomes horizontal.
• D) The Phillips curve is unaffected.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.