The Phillips Curve will shift downward if
A) the expected inflation rate falls.
B) the price level falls.
C) the overall employment rate remains unchanged.
D) the unexpected inflation rate rises.

Question

Quizplus · Accepted Answer

The Phillips Curve shows the relationship between inflation and unemployment. A decrease in the expected inflation rate would cause firms to set lower wages, which would lead to a decrease in the price level and ultimately shift the Phillips Curve downward.

The Phillips Curve Will Shift Downward If