Figure 358 The lefthand graph shows a shortrun aggregatesupp

Figure 35-8. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. C the right-hand diagram, \"Inf Rate\" means \"Infation Rate.\" Inf Rate AS AS AD PC2 PC Refer to Figure 35.8. Faced with the shift of the Phillips curve from PC, to PC2, policymakers will O a ask whether the shift is temporary or permanent. O b. be concerned with how people adjust their expectations of inflation as a result of the shift. O c. face, as well, a decision as to whether to accommodate the shock d.All of the above are correct

Solution

Solution: all of the above are correct

Explanation: When Phillips curve shifts from PC1 to PC2 the investors would want to know about the safety of their funds, thus will like to know whether the shift is permanent or temporary; how people will react to this change; and to make a decision whether or not to accommodate the stock