A rightward and upward shift of the Phillips Curve is consistent with the occurrence of stagﬂation.

Question

Quizplus · Accepted Answer

A rightward shift in the Phillips Curve represents an increase in the natural rate of unemployment, which can occur due to structural factors such as changes in technology or demographics. An upward shift in the Phillips Curve represents an increase in the rate of inflation. Stagflation occurs when both unemployment and inflation are high, which can happen if there is a supply shock that increases costs for firms and reduces output. Therefore, a rightward and upward shift in the Phillips Curve is consistent with the occurrence of stagflation.

A Rightward and Upward Shift of the Phillips Curve Is