Where Is the PhillipsCurve?

One of the central propositions of macroeconomic theory is the Phillipscurve, a pressure cooker model of the inflationary process. If the economy runs toohot, inflation will follow. If the economy cools and the pressuredrops, wage and price inflation will ease. Yet in the UnitedStates, UnitedKingdom, andJapan, unemployment is low but inflation is nowhere in sight. The Phillips curve has gone flat.

How does the Phillips curve model account for the facts reported in the newsclip?

A. Thelong-run Phillips curve has shifted leftward but theshort-run Phillips curve has not changed.

B. Theshort-run Phillips curve has disappeared.

C. A low expected inflation rate has shifted theshort-run Phillips curve downward.

D. Thelong-run Phillips curve has disappeared.