Which of the following leads to a downward shift in the short- run Phillips curve?
A) The long- run Phillips curve shifts rightward.
B) Unexpected inflation increases.
C) People expect the unemployment rate to increase.
D) People expected inflation to be 5 percent last year and now expect inflation to be 3 percent this year.

Question

Quizplus · Accepted Answer

A decrease in expected inflation leads to a downward shift in the short-run Phillips curve, as it reduces the inflation rate for any given level of unemployment.

Which of the Following Leads to a Downward Shift in the Short-