If a central bank attempts to lower the inflation rate but the public doesn't believe the inflation rate will fall as far as the central bank says, then in the short run unemployment
A)rises.As inflation expectations adjust, the short-run Phillips curve shifts right.
B)rises.As inflation expectations adjust, the short-run Phillips curve shifts left.
C)falls.As inflation expectations adjust, the short-run Phillips curve shifts right.
D)falls.As inflation expectations adjust, the short-run Phillips curve shifts left.

Question

Quizplus · Accepted Answer

If the public doesn't believe the inflation rate will fall as far as the central bank says, then inflation expectations will not adjust as quickly. This will cause the short-run Phillips curve to shift left, leading to higher unemployment in the short run.

If a Central Bank Attempts to Lower the Inflation Rate