If policymakers are successful at reducing inflationary expectations the

Question

Quizplus · Accepted Answer

If policymakers are successful at reducing inflationary expectations, people will expect lower inflation in the future. This will shift the short-run Phillips curve leftward, meaning that for any level of unemployment, there will be a lower level of inflation. This can be seen in the Phillips curve equation, which shows a negative relationship between unemployment and inflation.

If Policymakers Are Successful at Reducing Inflationary Expectations the