A change in expected inflation shifts
A)the short-run Phillips curve, but not the long run Phillips curve.
B)the long-run Phillips curve, but not the long run Phillips curve.
C)neither the short-run nor the long-run Phillips curve.
D)both the short-run and long-run Phillips curve right.

Question

Quizplus · Accepted Answer

The short-run Phillips curve shifts with changes in expected inflation because it reflects the inverse relationship between unemployment and inflation in the short term. However, the long-run Phillips curve is vertical at the natural rate of unemployment and does not shift with changes in expected inflation, as it represents the idea that there is no trade-off between inflation and unemployment in the long run.

A Change in Expected Inflation Shifts