Along a short- run Phillips curve, suppose the expected inflation rate is 6 per cent. If the inflation rate turns out to be 8 per cent instead,
A)there is a movement downward along the short- run Phillips curve.
B)there is a downward shift of the short- run Phillips curve.
C)there is a movement upward along the short- run Phillips curve.
D)None of the above answers is correct.

Question

Quizplus · Accepted Answer

When the actual inflation rate is higher than the expected inflation rate, there is a movement upward along the short-run Phillips curve, indicating a lower unemployment rate.

Along a Short- Run Phillips Curve, Suppose the Expected Inflation