On the modern Phillips curve,the initial impact of an increase in the world price of steel is shown by ________.
A)an upward movement along the Phillips curve to a higher inflation rate
B)an upward shift of the Phillips curve leading to higher inflation rates for any unemployment rate
C)a downward shift of the Phillips curve leading to lower inflation rates for any unemployment rate
D)a downward movement along the Phillips curve to higher unemployment rates
E)none of the above

Question

Quizplus · Accepted Answer

An increase in the world price of steel is a cost-push factor that would increase production costs for industries relying on steel. This leads to higher prices overall, causing the Phillips curve to shift upwards, indicating higher inflation rates for any given level of unemployment.

On the Modern Phillips Curve,the Initial Impact of an Increase