Which of the following would we NOT expect to happen if government policy moved the economy up along a given short-run Phillips curve?
A)Ravi reads in the newspaper that the central bank raised the money supply.
B)Tony gets more job offers.
C)Louis makes smaller increases in the prices at his health food store.
D)Jessica's nominal wage increases at a faster rate.

Question

Quizplus · Accepted Answer

Moving up along a short-run Phillips curve typically involves higher inflation and lower unemployment. Therefore, we would expect prices to increase, not decrease, making smaller price increases unexpected.

Which of the Following Would We NOT Expect to Happen