-In the above figure, what might have shifted the short-run Phillips curve from SRPC? to SRPC? while leaving the long-run Phillips curve unchanged at LRPC?
A) The natural unemployment rate increased.
B) The natural unemployment rate decreased.
C) The expected inflation rate increased.
D) The expected inflation rate decreased.

Question

-In the above figure, what might have shifted the short-run Phillips curve from SRPC? to SRPC? while leaving the long-run Phillips curve unchanged at LRPC?
A) The natural unemployment rate increased. 
B) The natural unemployment rate decreased. 
C) The expected inflation rate increased. 
D) The expected inflation rate decreased.

Quizplus · Accepted Answer

The expected inflation rate increased, which would shift the short-run Phillips curve to the right, reflecting higher inflation at every level of unemployment, without altering the long-run Phillips curve, which is vertical at the natural rate of unemployment.

-In the Above Figure, What Might Have Shifted the Short-Run