An increase in the expected rate of inflation shifts the

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Quizplus · Accepted Answer

An increase in the expected rate of inflation causes an upward shift in the short-run Phillips curve. This means that for a given unemployment rate, we can expect a higher level of inflation. The long-run Phillips curve is not affected by changes in the expected rate of inflation, as it only reflects the natural rate of unemployment and does not depend on short-term changes in inflation expectations.

An Increase in the Expected Rate of Inflation Shifts the