How does the short-run Phillips curve reflect a financial crisis such as the one in 2008-2009?
A) as a leftward shift in the short-run Phillips curve
B) as a rightward shift in the short-run Phillips curve
C) as a downward movement along the short-run Phillips curve
D) as an upward movement along the short-run Phillips curve

Question

Quizplus · Accepted Answer

The short-run Phillips curve shows the relationship between inflation and unemployment. During a financial crisis, unemployment rises sharply, which leads to a downward movement along the short-run Phillips curve.

How Does the Short-Run Phillips Curve Reflect a Financial Crisis