Use the following to answer questions :
Exhibit: AD-AS Shifts

-(Exhibit: Short-run Phillips Curve)As the short-run Phillips curve shifts from A to B to C to D,policymakers face:
A) the same tradeoff between inflation and unemployment.
B) a lower rate of inflation for any level of unemployment.
C) a higher rate of inflation for any level of unemployment.
D) higher than expected inflation rates and lower unemployment rates.

Question

Use the following to answer questions :
Exhibit: AD-AS Shifts
 
-(Exhibit: Short-run Phillips Curve)As the short-run Phillips curve shifts from A to B to C to D,policymakers face:
A) the same tradeoff between inflation and unemployment. 
B) a lower rate of inflation for any level of unemployment. 
C) a higher rate of inflation for any level of unemployment. 
D) higher than expected inflation rates and lower unemployment rates.

Quizplus · Accepted Answer

As the short-run Phillips curve shifts from A to B to C to D, the rate of inflation for any level of unemployment decreases, implying that policymakers face a lower rate of inflation for any level of unemployment. This could be due to various factors like an increase in productivity or a decrease in input costs.

Use the Following to Answer Questions