Which of the following might cause an upward shift of the modern Phillips curve?
A)an increase in oil prices
B)an increase in the price of imports
C)wage agreements that include compensation for inflation
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

An increase in oil prices or an increase in the price of imports both lead to an increase in the cost of production, which causes businesses to increase prices to maintain their profit margins. This leads to an upward shift of the Phillips curve. Similarly, if wage agreements include compensation for inflation, then workers will demand higher wages to maintain their purchasing power, causing an increase in production costs and a shift of the Phillips curve upwards. Hence, all three options - A, B, and C - would cause an upward shift of the modern Phillips curve.

Which of the Following Might Cause an Upward Shift of the Modern