-When inflation expectations changed during the 1967-1971 period, this change led to
A) the long-run Phillips curve shifting rightward.
B) the short-run Phillips curve shifting upward.
C) an increase in the natural unemployment rate.
D) the short-run and the long-run Phillips curve both shifting upward.
E) the long-run Phillips curve shifting leftward.

Question

-When inflation expectations changed during the 1967-1971 period, this change led to
A) the long-run Phillips curve shifting rightward. 
B) the short-run Phillips curve shifting upward. 
C) an increase in the natural unemployment rate. 
D) the short-run and the long-run Phillips curve both shifting upward. 
E) the long-run Phillips curve shifting leftward.

Quizplus · Accepted Answer

During the 1967-1971 period, changes in inflation expectations led to an upward shift in the short-run Phillips curve, reflecting higher inflation at each level of unemployment.

-When Inflation Expectations Changed During the 1967-1971 Period, This Change