Consider the labor market Phillips curve. A negative supply shock will cause _____ the labor market Phillips curve.
A)a movement to the left along
B)a movement to the right along
C)a left shift of
D)a right shift of

Question

Quizplus · Accepted Answer

A negative supply shock will cause a decrease in output and an increase in prices, leading to an increase in inflation. This will shift the labor market Phillips curve to the right, indicating that a higher level of inflation is associated with any given level of unemployment.

Consider the Labor Market Phillips Curve