When workers expect more inflation than actually occurs:
A)the Phillips curve becomes vertical.
B)the long-run Phillips curve shifts to the right.
C)the short-run Phillips curve shifts to the left.
D)there will be a movement down the short-run Phillips curve.
E)there will be a movement up the short-run Phillips curve.

Question

Quizplus · Accepted Answer

When workers expect more inflation than actually occurs, actual inflation is lower than expected, leading to lower wage demands and thus lower unemployment, causing a movement down the short-run Phillips curve.

When Workers Expect More Inflation Than Actually Occurs