The Phillips curve will shift up with ________ or ________.
A) a positive supply shock; an increase in expected inflation
B) a positive supply shock; a decrease in expected inflation
C) a negative supply shock; an increase in expected inflation
D) a negative supply shock; a decrease in expected inflation

Question

Quizplus · Accepted Answer

A negative supply shock increases production costs, leading to higher inflation at any unemployment level. An increase in expected inflation raises the inflation rate for any given level of unemployment. Both factors shift the Phillips curve upward.

The Phillips Curve Will Shift Up with ________ or ________

The Phillips Curve Will Shift Up with or