Which of the following will occur because of a rightward shift of the Phillips curve?
A)A rightward shift of aggregate demand.
B)A decrease in both unemployment and inflation.
C)A trade-off between unemployment and inflation.
D)Stagflation.

Question

Quizplus · Accepted Answer

A rightward shift of the Phillips curve indicates that there is a decrease in the trade-off between unemployment and inflation, and as a result, an increase in inflation can only be achieved by accepting a higher level of unemployment. This means that the economy is experiencing stagflation, a situation of high inflation and high unemployment. Options A and B are incorrect as they do not reflect the consequences of a rightward shift of the Phillips curve. Option C is also incorrect as the trade-off between unemployment and inflation decreases, indicating a lack of trade-off, rather than an increase in trade-off.

Which of the Following Will Occur Because of a Rightward