The expectation of a lower inflation rate will cause:
A)the short-run Phillips curve to become vertical.
B)the short-run Phillips curve to shift leftward.
C)a movement down along a short-run Phillips curve.
D)the short-run Phillips curve to shift rightward.

Question

The expectation of a lower inflation rate will cause:
A)​the short-run Phillips curve to become vertical.
B)​the short-run Phillips curve to shift leftward.
C)​a movement down along a short-run Phillips curve.
D)​the short-run Phillips curve to shift rightward.

Quizplus · Accepted Answer

When there is an expectation of a lower inflation rate, it will cause the short-run Phillips curve to shift leftward as there will be less pressure on wages and prices to rise, resulting in a lower inflation rate at any given unemployment rate.

The Expectation of a Lower Inflation Rate Will Cause