Adverse aggregate-supply shocks or stagﬂation would cause a
A) movement up along a stable Phillips Curve.
B) movement down along a stable Phillips Curve.
C) shift of the Phillips Curve to the left.
D) shift of the Phillips Curve to the right.

Question

Quizplus · Accepted Answer

Adverse aggregate-supply shocks or stagflation lead to higher inflation and unemployment simultaneously, which is represented by a shift of the Phillips Curve to the right, indicating that the same level of unemployment is now associated with higher inflation.

Adverse Aggregate-Supply Shocks or Stagﬂation Would Cause a