-In the above figure, suppose that the economy is at point C. If the inflation rate is lower than expected,
A) the SRPC will shift upward.
B) the SRPC will shift downward.
C) the LRPC will shift rightward.
D) Neither the LRPC nor the SRPC will shift.

Question

-In the above figure, suppose that the economy is at point C. If the inflation rate is lower than expected,
A) the SRPC will shift upward. 
B) the SRPC will shift downward. 
C) the LRPC will shift rightward. 
D) Neither the LRPC nor the SRPC will shift.

Quizplus · Accepted Answer

If the inflation rate is lower than expected, it typically results in movement along the Short-Run Phillips Curve (SRPC), not a shift of the curve itself. Therefore, neither the SRPC nor the Long-Run Phillips Curve (LRPC) will shift.

-In the Above Figure, Suppose That the Economy Is at Point