-In the above figure, what might have shifted the short- run Phillips curve from SRPC1 to SRPC2 while leaving the long- run Phillips curve unchanged at LRPC?
A)The natural unemployment rate increased.
B)The expected inflation rate increased.
C)The natural unemployment rate decreased.
D)The expected inflation rate decreased.

Question

-In the above figure, what might have shifted the short- run Phillips curve from SRPC1 to SRPC2 while leaving the long- run Phillips curve unchanged at LRPC?
A)The natural unemployment rate increased. 
B)The expected inflation rate increased. 
C)The natural unemployment rate decreased. 
D)The expected inflation rate decreased.

Quizplus · Accepted Answer

An increase in the expected inflation rate can shift the short-run Phillips curve to the right, as workers and firms adjust their expectations, leading to higher actual inflation at each level of unemployment.

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