If the Fed moves the economy upward along the short-run Phillips curve from an initial inflationary equilibrium,what is happening?
A) Unemployment is rising above the natural rate,output is decreasing,and inflation is decreasing.
B) Unemployment is falling below the natural rate,output is decreasing,and inflation is increasing.
C) Unemployment is rising above the natural rate,output is increasing,and inflation is decreasing.
D) Unemployment is falling below the natural rate,output is increasing,and inflation is increasing.
E) Unemployment is falling below the natural rate,output is increasing,and inflation is decreasing.

Question

Quizplus · Accepted Answer

When the economy moves upward along the short-run Phillips curve, unemployment falls below the natural rate, output increases, and inflation increases.

If the Fed Moves the Economy Upward Along the Short-Run