If people anticipate higher inflation,but inflation remains the same then
A)the short-run Phillips curve would shift right and unemployment would rise.
B)the short-run Phillips curve would shift right and unemployment would fall.
C)the short-run Phillips curve would shift left and unemployment would rise.
D)the short-run Phillips curve would shift left and unemployment would fall.

Question

Quizplus · Accepted Answer

If people anticipate higher inflation, they may demand higher wages, causing higher costs for firms, which leads to an upward pressure on prices. If the actual inflation remains the same and does not meet the expectation of people, the short-run Phillips curve will shift right, indicating that higher unemployment is associated with any given level of inflation, as firms struggle to compete with higher costs, leading to layoffs and lower employment.

If People Anticipate Higher Inflation,but Inflation Remains the Same Then