When the expected inflation rate_{--------------------}, the short-run Phillips curve_{--------------------} A)rises; shifts upward B)rises; shifts downward C)falls; shifts upward D)falls; does not shift E)rises; might shift upward or downward depending on how the long-run Phillips curve shifts

Question

Quizplus · Accepted Answer

When the expected inflation rate rises, the short-run Phillips curve shifts upward because higher expected inflation leads to higher actual inflation at any given level of unemployment.

When the Expected Inflation Rate--------------------, the Short-Run Phillips Curve--------------------

When the Expected Inflation Rate_{--------------------}, the Short-Run Phillips Curve_{--------------------}