An increase in the expected rate of inflation shifts the
A)short-run Phillips curve downward.
B)short-run Phillips curve upward.
C)long-run Phillips curve rightward.
D)long-run Phillips curve leftward.
E)long-run Phillips curve upward.

Question

Quizplus · Accepted Answer

An increase in the expected rate of inflation leads to an increase in the actual rate of inflation in the short run, which causes firms to increase production and reduce unemployment. This results in a movement along the Phillips curve upward.

An Increase in the Expected Rate of Inflation Shifts the