If the Fed tries to lower the unemployment rate so it is lower than the natural unemployment rate, in the short run before the expected inflation rate changes, the SRPC_{--------------------} and the LRPC_{--------------------} . A)does not change; shifts rightward B)shifts downward; does not change C)shifts upward; does not change D)shifts downward; shifts leftward E)does not change; does not change

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Quizplus · Accepted Answer

In the short run, the Short-Run Phillips Curve (SRPC) does not change because it represents the trade-off between inflation and unemployment at a given expected inflation rate. The Long-Run Phillips Curve (LRPC) also does not change as it is vertical at the natural rate of unemployment, indicating no trade-off between inflation and unemployment in the long run.

If the Fed Tries to Lower the Unemployment Rate So