A country reports that its inflation rate and unemployment rate have both increased. These changes could be the result of
A)a leftward shift of the long-run Phillips curve.
B)a movement upward along the short-run Phillips curve.
C)a downward shift of the short-run Phillips curve.
D)a movement downward along the short-run Phillips curve.
E)an upward shift of the short-run Phillips curve.

Question

Quizplus · Accepted Answer

An upward shift of the short-run Phillips curve indicates that for any given level of unemployment, inflation is higher, which can result in both higher inflation and higher unemployment.

A Country Reports That Its Inflation Rate and Unemployment Rate