An increase in the expected inflation rate shifts the
A) short-run Phillips curve downward.
B) short-run Phillips curve upward.
C) long-run Phillips curve upward.
D) long-run Phillips curve downward.

Question

Quizplus · Accepted Answer

An increase in the expected inflation rate shifts the short-run Phillips curve upward because it reflects higher inflation expectations among workers and firms, leading to faster wage and price increases at every level of unemployment.

An Increase in the Expected Inflation Rate Shifts the