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ʺAll for One, but None for Allʺ

Question 308

Multiple Choice

ʺAll for One, but None for Allʺ
In an article regarding how Great Britain and France are addressing the economic crisis in 2008, Britainʹs prime minister ʺis eager to encourage consumer spendingʺ while Franceʹs president
ʺwants to boost investment in both the private and public sectors.ʺ Both leaders are concerned because ʺhardly a day goes by without some manufacturing company announcing painful restructuring, plant closures or temporary lay-offs.ʺ
If the governments can increase consumption or investment while holding the expected inflation constant, there would be


A) a movement down along the short-run Phillips curve
B) a movement up along the short-run Phillips curve.
C) a leftward shift of the AD curve.
D) a rightward shift of the long-run Phillips curve.

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