According to the Phillips curve, in the short run, if policy makers choose an expansionary policy to lower the rate of unemployment,
A) the economy will experience an increase in inflation.
B) the economy will experience a decrease in inflation.
C) inflation will be unaffected if price expectations are unchanging.
D) none of these answers

Question

Quizplus · Accepted Answer

According to the Phillips curve, there is an inverse relationship between the rate of unemployment and the rate of inflation in the short run. Choosing an expansionary policy to lower the rate of unemployment would shift the Phillips curve to the right and increase the rate of inflation.

According to the Phillips Curve, in the Short Run, If