Rightward AS shifts will cause
A)Leftward Phillips curve shifts.
B)Rightward Phillips curve shifts.
C)Movements up and to the left along the existing Phillips curve.
D)Movements down and to the right along the existing Phillips curve.

Question

Quizplus · Accepted Answer

A rightward AS shift implies a decrease in production costs which increases aggregate supply, thus leading to a decrease in prices and unemployment. This shift results in a leftward shift of the Phillips curve, as lower rates of unemployment will be associated with lower rates of inflation.

Rightward AS Shifts Will Cause