A rise in expected inflation causes
A)the SP curve to shift upward.
B)the SP curve to shift downward.
C)a movement upward along the SP curve.
D)a movement downward along the SP curve.

Question

Quizplus · Accepted Answer

A rise in expected inflation would cause an increase in prices and wages, resulting in firms increasing prices to maintain their profits. This shifts the short-run Phillips (SP) curve upward.

A Rise in Expected Inflation Causes