According to the Phillips curve, in the short run, if policy makers choose an expansionary policy to lower the rate of unemployment,
A)the economy will experience an increase in inflation.
B)the economy will experience a decrease in inflation.
C)inflation will be unaffected if price expectations are unchanging.
D)None of these answers.

Question

Quizplus · Accepted Answer

The Phillips curve shows an inverse relationship between unemployment and inflation in the short run. Therefore, if policy makers pursue an expansionary policy to lower unemployment, it will result in an increase in inflation.

According to the Phillips Curve, in the Short Run, If