An increase in the expected inflation rate shifts
A) both the short-run and the long-run Phillips curves upward.
B) the long-run but not the short-run Phillips curve upward.
C) neither the short-run nor the long-run Phillips curve.
D) the short-run but not the long-run Phillips curve upward.

Question

Quizplus · Accepted Answer

An increase in the expected inflation rate shifts the short-run Phillips curve upward because it reflects higher inflation expectations at each level of unemployment, but it does not affect the long-run Phillips curve, which is vertical and represents the natural rate of unemployment.

An Increase in the Expected Inflation Rate Shifts