According to the IS-MP-PC model, a lower level of past inflation causes
A)a lower current GDP.
B)a higher current inflation.
C)a higher current GDP.
D)none of the above.

Question

Quizplus · Accepted Answer

According to the IS-MP-PC model, a lower past inflation rate shifts the Phillips Curve downward, indicating that there is lower inflation pressure in the economy, enabling the central bank to pursue expansionary monetary policy, which leads to a higher current GDP.

According to the IS-MP-PC Model, a Lower Level of Past