Question

From the Fed's Minutes Read the news clip, then answer the following question FOMC members are predicting that the U.S. economy O A. is on the long-run Phillips curve Members expected real GDP growth to be moderate over coming quarters and then to pick up very gradually, with the unemployment rate declining only slowly With longer-term inflation expectations stable, members anticipated that inflation over the medium run would be at or below 2 percent a year. O B. is on a short-run Phillips curve to the left of the LRPC and will move rightward down along the SRPC is on a short-run Phillips curve to the right of the LRPC and will move leftward up along the SRPC Source: FOMC Minutes, June 2012 C. O D. will experience a leftward shifting short-run Phillips curve

Answer 1

The economy is on the right side of LRPC because as we move from right to left the unemployment rate falls and inflation rises and the Fed is expecting the economy to follow this mechanism.

Answer-C.