Given a Phillips Curve with stable and predictable inflation and unemployment rate tradeoffs, it appears that:
A) An expansionary fiscal policy can shift the curve to the left
B) A tight money policy can shift the curve to the right
C) Manipulating aggregate demand through fiscal and monetary policies has the effect of causing a movement along the curve
D) Manipulating aggregate demand through fiscal and monetary policies has the effect of shifting the curve

Question

Quizplus · Accepted Answer

The Phillips Curve suggests a trade-off between inflation and unemployment. Fiscal and monetary policies that manipulate aggregate demand typically cause movements along the curve, not shifts of the curve itself.

Given a Phillips Curve with Stable and Predictable Inflation and Unemployment