Use the figure below to answer the following questions.

Figure 28.2.2
-Refer to Figure 28.2.2.The figure illustrates an economy's Phillips curves.If the expected inflation rate changes to 3 percent,the

Question

Use the figure below to answer the following questions.
  
Figure 28.2.2
-Refer to Figure 28.2.2.The figure illustrates an economy's Phillips curves.If the expected inflation rate changes to 3 percent,the

Quizplus · Accepted Answer

When the expected inflation rate changes, the short run Philips curve will shift vertically. However, the long run Philips curve will not change as it is not related to expected inflation, but to the natural rate of unemployment. Therefore, only option A is correct.

Use the Figure Below to Answer the Following Questions