Multiple Choice
-Refer to Exhibit 6 above.Suppose the economy is operating at point D.As people revise their price expectations,
A) the short run Phillips curve will shift in the direction of the short run Phillips curve associated with an expectation of 3 per cent inflation.
B) the short run Phillips curve will shift in the direction of the short run Phillips curve associated with an expectation of 9 per cent inflation.
C) the short run Phillips curve will shift in the direction of the short run Phillips curve associated with an expectation of 6 per cent inflation.
D) the long run Phillips curve will shift to the left.
Correct Answer:
Verified
Correct Answer:
Verified
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