Consider the Phillips curve shown here. In region B:

A)inflation equals expected inflation.
B)inflation rises above expected inflation.
C)there is insufficient demand.
D)the output gap is negative.

Question

Consider the Phillips curve shown here. In region B:

A)inflation equals expected inflation. 
B)inflation rises above expected inflation. 
C)there is insufficient demand. 
D)the output gap is negative.

Quizplus · Accepted Answer

In region B, inflation rises above expected inflation, meaning actual inflation is greater than what people expected. This could occur due to factors such as supply shocks or higher-than-anticipated aggregate demand.

Consider the Phillips Curve Shown Here