Which of the following leads to a downward shift in the short-run Phillips curve?
A) The long-run Phillips curve shifts rightward.
B) Unexpected inflation increases.
C) People expected inflation to be 5 percent last year and now expect inflation to be 3 percent this year.
D) People expect the unemployment rate to increase.

Question

Quizplus · Accepted Answer

A downward shift in the short-run Phillips curve occurs when expected inflation decreases, as in option C where people expect lower inflation this year compared to last year.

Which of the Following Leads to a Downward Shift in the Short-Run