What role does expected inflation play in the transition from short-run to long-run equilibrium?

• A. It increases, causing a permanent shift in the long-run Phillips curve.
• B. It adjusts, leading to a new short-run Phillips curve and long-run equilibrium.
• C. It remains constant, maintaining the current short-run Phillips curve.
• D. It decreases, causing a permanent shift in the long-run Phillips curve.

Answer: (B)