how-does-the-economy-transition-from-short-run-to-long-run-equilibrium-after-a-c

Question

How does the economy transition from short-run to long-run equilibrium after a contractionary policy?

Accepted Answer

Expected inflation decreases, shifting the short-run Phillips curve to the left.

Answer

The natural rate of unemployment decreases, shifting the long-run Phillips curve.

Answer

The natural rate of unemployment increases, shifting the long-run Phillips curve.

Answer

Expected inflation increases, shifting the short-run Phillips curve to the right.