Consider the Phillips curve shown here. In region A:

A)inflation falls below expected inflation.
B)inflation rises above expected inflation.
C)there is excess demand.
D)the output gap is positive.

Question

Consider the Phillips curve shown here. In region A:

A)inflation falls below expected inflation. 
B)inflation rises above expected inflation. 
C)there is excess demand. 
D)the output gap is positive.

Quizplus · Accepted Answer

In region A, inflation is below expected inflation, indicating that the economy is experiencing a period of lower than expected growth or possibly a recession. This could be due to factors such as a decrease in consumer spending, a decline in investment, or a decrease in the money supply.

Consider the Phillips Curve Shown Here