In a speech to Asia Pacific Economic Cooperation summit in Peru in November 2008, President Hu of China commented on his country's $586 billion fiscal stimulus plan by saying, "Instead of relying mainly on investment and export we will adopt a coordinated approach that combines consumption, investment and export to boost the economy. And instead of relying heavily on higher consumption of material resources we will achieve development by making scientific and technological progress."
If his country's plan works and the expected inflation rate does not change, there will be a
A) movement down along the short- run Phillips curve.
B) movement up along the short- run Phillips curve.
C) leftward shift of the long- run Phillips curve.
D) rightward shift of the long- run Phillips curve.
Correct Answer:
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