During the mid and last part of the 1990's both inflation and unemployment were low.In general this could have been the result of
A)adverse supply shocks that shifted the short-run Phillips curve left.
B)adverse supply shocks that shifted the short-run Phillips curve right.
C)favorable supply shocks that shifted the short-run Phillips curve left.
D)favorable supply shocks that shifted the short-run Phillips curve right.

Question

Quizplus · Accepted Answer

Favorable supply shocks shift the short-run Phillips curve leftward, causing a decrease in both inflation and unemployment. This is consistent with the situation described in the question where both inflation and unemployment were low in the mid and late 1990s. Adverse supply shocks, on the other hand, shift the short-run Phillips curve rightward and lead to an increase in both inflation and unemployment.

During the Mid and Last Part of the 1990's Both