As inflationary expectations rise, the _____ Phillips curve shifts to the _____.

Question

Quizplus · Accepted Answer

Inflationary expectations affect the short-run Phillips curve, causing it to shift to the right. This is because when people expect higher inflation, they will demand higher wages and prices, leading to increased inflationary pressures in the short run. The long-run Phillips curve is not affected by inflationary expectations, as it is determined by the natural rate of unemployment and potential GDP.

As Inflationary Expectations Rise, the _____ Phillips Curve Shifts to the _____

As Inflationary Expectations Rise, the _ Phillips Curve Shifts to the _