(Figure: Understanding Phillips Curves Shifts 2) Which statement BEST describes a decision by Congress to move the economy from Phillips curve PC₀ to Phillips curve PC₁?

Question

Quizplus · Accepted Answer

Moving from Phillips curve PC₀ to PC₁ indicates a shift to the left on the Phillips Curve, indicating lower expected inflation rates. This would require a contractionary fiscal policy to decrease aggregate demand, which would lead to lower inflationary pressures but also higher unemployment.

(Figure: Understanding Phillips Curves Shifts 2) Which Statement BEST Describes