The following question are based on the following graph, which shows two different Phillips curves, labeled (1) and (2):

-Phillips curve (2)could shift up to curve (1)as a result of
A) the decreased bargaining power of unions.
B) expectations of a higher rate of inflation.
C) a higher level of training of the labor force.
D) increased labor productivity.
E) decreased government spending.

Question

The following question are based on the following graph, which shows two different Phillips curves, labeled (1) and (2):
 
-Phillips curve (2)could shift up to curve (1)as a result of
A) the decreased bargaining power of unions. 
B) expectations of a higher rate of inflation. 
C) a higher level of training of the labor force. 
D) increased labor productivity. 
E) decreased government spending.

Quizplus · Accepted Answer

Phillips curve (2) shows a higher rate of inflation for a given unemployment rate than Phillips curve (1). This suggests that if individuals and firms expect a higher rate of inflation in the future, they will demand higher nominal wages, leading to a shift up of the Phillips curve. Therefore, the correct answer is B. None of the other options would directly affect the position of the Phillips curve.

The Following Question Are Based on the Following Graph, Which