An increase in the expected rate of inflation shifts the
A)short- run Phillips curve downward.
B)long- run Phillips curve leftward.
C)long- run Phillips curve upward.
D)short- run Phillips curve upward.
E)long- run Phillips curve rightward.

Question

Quizplus · Accepted Answer

An increase in the expected rate of inflation shifts the short-run Phillips curve upward because it reflects higher inflation expectations leading to workers demanding higher wages, which in turn causes employers to raise prices, thereby increasing inflation.

An Increase in the Expected Rate of Inflation Shifts the