A. If the Federal Reserve reduces the rate of money growth and maintains it at the new lower rate, eventually expected inflation will _________ and the short-run Phillips curve will shift _________.
a. decrease; downward
b. decrease; upward
c. increase; downward
d. increase; upward
B. When an adverse supply shock shifts the short-run aggregate-supply curve to the left, it also
a. moves the economy along the short-run Phillips curve to a point with higher inflation and lower unemployment.
b. moves the economy along the short-run Phillips curve to a point with lower inflation and higher unemployment.
c. shifts the short-run Phillips curve to the right.
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