Which of the following would move the economy up and to the left along a short run Phillips Curve?
A)Sales of government securities by the Fed.
B)Increases in taxes by the federal government.
C)Reductions in government expenditures on newly produced goods and services.
D)None of the above

Question

Which of the following would move the economy up and to the left along a short run Phillips Curve?
A)​Sales of government securities by the Fed.
B)​Increases in taxes by the federal government.
C)​Reductions in government expenditures on newly produced goods and services.
D)​None of the above

Quizplus · Accepted Answer

Moving up and to the left along a short-run Phillips Curve implies a decrease in inflation and an increase in unemployment. Choices A, B, and C all describe contractionary policies that would indeed reduce inflation but would also move the economy down and to the right along the curve, increasing unemployment and not up and to the left as the question suggests. Therefore, none of the provided options would result in moving up and to the left along the curve.

Which of the Following Would Move the Economy Up and to the Left