If there is a temporary adverse supply shock,then the short-run Phillips curve shifts to the
A)right.It remains to the right regardless of monetary policy.
B)right.It remains to the right if the central bank pursues expansionary monetary policy.
C)left.It remains to the left regardless of monetary policy.
D)left.It remains to the left if the central bank pursues expansionary monetary policy.

Question

Quizplus · Accepted Answer

A temporary adverse supply shock, such as an increase in oil prices, shifts the short-run Phillips curve to the right, indicating higher inflation for a given level of unemployment. If the central bank pursues expansionary monetary policy, it can exacerbate inflation, keeping the curve to the right.

If There Is a Temporary Adverse Supply Shock,then the Short-Run