If the central bank keeps the money supply growth rate constant, but people raise their inflation expectations by 1 percentage point, then the short-run Phillips curve shifts

Question

Quizplus · Accepted Answer

When people raise their inflation expectations, the short-run Phillips curve shifts to the right, indicating higher inflation for any given level of unemployment, which can lead to a rise in the unemployment rate if the money supply growth rate is constant.

If the Central Bank Keeps the Money Supply Growth Rate