Scenario 35-1
Suppose that in the first half of June 2022, the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were affecting the economy.
-Refer to Scenario 35-1. The short-run effects of rising world commodity prices are shown by
A)moving to the right along the short-run Phillips curve.
B)moving to the left along the short-run Phillips curve.
C)shifting the short-run Phillips curve right.
D)shifting the short-run Phillips curve left.

Question

Quizplus · Accepted Answer

Rising world commodity prices, such as oil and foodstuffs, typically lead to higher inflation. In the context of the short-run Phillips curve, which illustrates the trade-off between inflation and unemployment, higher inflation due to rising commodity prices would shift the short-run Phillips curve to the right. This shift indicates that for any given level of unemployment, the inflation rate is higher.

Scenario 35-1 Suppose That in the First Half of June 2022, the 2022