If the inflation rate is decreasing while unemployment is decreasing:
A)the short-run Phillips curve must have shifted right.
B)the short-run Phillips curve must have shifted left.
C)it involved a movement along the short-run Phillips curve.
D)it would be inconsistent with any possible Phillips curve scenario.

Question

If the inflation rate is decreasing while unemployment is decreasing:
A)​the short-run Phillips curve must have shifted right.
B)​the short-run Phillips curve must have shifted left.
C)​it involved a movement along the short-run Phillips curve.
D)​it would be inconsistent with any possible Phillips curve scenario.

Quizplus · Accepted Answer

When the inflation rate is decreasing while unemployment is decreasing, it suggests that the economy is experiencing a leftward shift of the short-run Phillips curve, indicating that there is a lower rate of inflation for any given level of unemployment. This shift may be caused by a variety of factors, such as changes in policy, shifts in aggregate demand or supply, or changes in expectations.

If the Inflation Rate Is Decreasing While Unemployment Is Decreasing