In the Phillips curve is:
A) a demand shock
B) an inflation shock
C) a measure of the sensitivity of inflation to demand conditions
D) a permanent price trend
E) fiscal policy shock

Question

In the Phillips curve   is:
A) a demand shock 
B) an inflation shock 
C) a measure of the sensitivity of inflation to demand conditions 
D) a permanent price trend 
E) fiscal policy shock

Quizplus · Accepted Answer

In the Phillips curve equation, $\bar{a}$ represents an inflation shock, which is an unexpected change in inflation that is not explained by demand conditions.

In the Phillips Curve Is