If the expected inflation rate rises,then the short-run Phillips curve ________ and the long-run Phillips curve ________.

Question

Quizplus · Accepted Answer

When the expected inflation rate rises, the short-run Phillips curve shifts upward as firms expect higher inflation and adjust their prices accordingly. However, in the long run, the Phillips curve is vertical, indicating that there is no trade-off between inflation and unemployment, and therefore does not shift with changes in expected inflation.

If the Expected Inflation Rate Rises,then the Short-Run Phillips Curve