-In the above figure, what might have shifted the short-run Phillips curve from SRPC₁to SRPC₂ while leaving the long-run Phillips curve unchanged at LRPC? A) The expected inflation rate increased. B) The expected inflation rate decreased. C) The natural unemployment rate increased. D) The natural unemployment rate decreased.

Question

Quizplus · Accepted Answer

An increase in the expected inflation rate shifts the short-run Phillips curve to the right, as workers and firms adjust their expectations, leading to higher wage demands and prices, while the long-run Phillips curve remains unchanged.

-In the Above Figure, What Might Have Shifted the Short-Run