Which of the following would shift the short-run Phillips curve?
A)an negative supply shock
B)an increase in inflationary expectations
C)a decrease in inflationary expectations
D)All of the above.

Question

Which of the following would shift the short-run Phillips curve?
A)​an negative supply shock
B)​an increase in inflationary expectations
C)​a decrease in inflationary expectations
D)​All of the above.

Quizplus · Accepted Answer

All of the above shifts the short-run Phillips curve. 
- A negative supply shock leads to an increase in the cost of production, leading to higher prices and lower output in the short run, shifting the Phillips curve to the right. 
- An increase in inflationary expectations leads to workers and firms demanding higher wages and prices, leading to higher inflation for any given unemployment rate, shifting the Phillips curve to the right. 
- A decrease in inflationary expectations leads to workers and firms accepting lower wage and price increases, leading to lower inflation for any given unemployment rate, shifting the Phillips curve to the left.

Which of the Following Would Shift the Short-Run Phillips Curve