The Phillips Curve will shift because of:
A) expected inflation.
B) normal inflation.
C) hyperinflation.
D) core inflation.

Question

Quizplus · Accepted Answer

The Phillips Curve shows the relationship between unemployment and inflation. Expected inflation refers to the idea that individuals and businesses adjust their expectations for future inflation based on past experiences and current economic conditions. If expected inflation increases, workers will demand higher wages and businesses will increase prices. This will shift the Phillips Curve upward, indicating that a higher level of inflation is now associated with any given level of unemployment.

The Phillips Curve Will Shift Because Of