In the mid and late 1990s,

Question

Quizplus · Accepted Answer

During the mid and late 1990s, there was a shift in the slope of the Phillips curve due to structural changes in the economy such as globalization and technological advancements. This led to a decrease in the natural rate of unemployment, causing a rightward shift in the short-run aggregate supply curve. At the same time, there was a leftward shift in the Phillips curve due to increased central bank credibility and inflation targeting policies, leading to lower inflation rates at any given level of unemployment. Therefore, both aggregate supply and the Phillips curve shifted in opposite directions, making answer choice C the best option.

In the Mid and Late 1990s