For this question,assume that the Phillips curve equation is represented by the following: πt - πt-1 = (m + z)- αut.Which of the following will NOT cause an increase in the natural rate of unemployment?

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Quizplus · Accepted Answer

An increase in the expected rate of inflation would shift the Phillips curve upward, causing an increase in the natural rate of unemployment. However, a reduction in m would shift the Phillips curve downward, resulting in a decrease in the natural rate of unemployment. A reduction in z and an increase in α would both shift the Phillips curve upward, causing an increase in the natural rate of unemployment. Therefore, the only option that would not cause an increase in the natural rate of unemployment is D, an increase in the expected rate of inflation.

For This Question,assume That the Phillips Curve Equation Is Represented