In the Short Run, a Surprise Reduction of Inflation by the Fed

Multiple Choice

In the short run, a surprise reduction of inflation by the Fed results in ________ in the long-run Phillips curve and ________ in the short-run Phillips curve.

A) no change; no change
B) a leftward shift; an upward shift
C) no change; a downward shift
D) a rightward shift; an upward shift
E) a rightward shift; a downward shift