A movement to the left along a given short-run Phillips curve could be caused by
A)a reduction in the natural rate of unemployment or expansionary monetary policy.
B)expansionary monetary policy, but not a reduction in the natural rate of unemployment.
C)either a reduction in the natural rate of unemployment or a contractionary monetary policy.
D)contractionary monetary policy, but not a reduction in the natural rate of unemployment.

Question

Quizplus · Accepted Answer

A movement to the left along the short-run Phillips curve indicates lower unemployment and higher inflation, which is typically caused by expansionary monetary policy. A reduction in the natural rate of unemployment would shift the curve, not move along it.

A Movement to the Left Along a Given Short-Run Phillips