A decrease in the expected inflation rate shifts the short-run Phillips curve
A) downward and shifts the long-run Phillips curve leftward.
B) upward and creates a movement upward along the long-run Phillips curve.
C) downward and creates a movement downward along the long -run Phillips curve.
D) upward and shifts long-run Phillips curve rightward.

Question

Quizplus · Accepted Answer

A decrease in the expected inflation rate shifts the short-run Phillips curve downward, indicating lower inflation for any given level of unemployment, and creates a movement downward along the long-run Phillips curve as actual inflation decreases.

A Decrease in the Expected Inflation Rate Shifts the Short-Run