On a Phillips curve diagram, a decrease in the rate of inflation, other things being equal, is represented by a(n):
A) upward movement along the Phillips curve.
B) downward movement along the Phillips curve.
C) upward shift of the Phillips curve.
D) downward shift of the Phillips curve.

Question

Quizplus · Accepted Answer

A decrease in the rate of inflation is represented by a downward movement along the Phillips curve, as it indicates a lower level of inflationary pressures in the economy. An upward movement along the Phillips curve would represent an increase in the rate of inflation, while shifts in the curve would indicate changes in the underlying factors affecting the relationship between inflation and unemployment.

On a Phillips Curve Diagram, a Decrease in the Rate