In the long run, what will shift the long-run Phillips curve to the right?
A) an increase in the minimum wage
B) an increase in the money supply
C) a decrease in government spending
D) tax cuts

Question

Quizplus · Accepted Answer

An increase in the minimum wage will increase firms' cost of production, leading to an increase in prices and a shift of the long-run Phillips curve to the right. B, C, and D are not likely to shift the long-run Phillips curve to the right. An increase in the money supply may lead to short-run inflation but will not have a permanent effect on the long-run Phillips curve. A decrease in government spending or tax cuts may have short-run effects on output and unemployment but are unlikely to affect the long-run Phillips curve.

In the Long Run, What Will Shift the Long-Run Phillips