LG 1. Knowledge Comprehension

LO 1.1. Generate knowledge of core concept and theory
If workers and firms begin to expect higher inflation, what is the most likely impact on the relationship between inflation and unemployment?

Question

LG 1. Knowledge Comprehension

LO 1.1. Generate knowledge of core concept and theory 
  If workers and firms begin to expect higher inflation, what is the most likely impact on the relationship between inflation and unemployment?

Answer

The short-run Phillips Curve shifts upward, leading to higher inflation for the same unemployment level.

Answer

The short-run Phillips Curve becomes flatter, reducing inflation without changing unemployment.

Answer

The long-run Phillips Curve shifts left, lowering both inflation and unemployment permanently.

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LG 1. Knowledge Comprehension LO 1.1. Generate knowledge of core concept and...

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