Suppose oil prices suddenly begin to rise and the Fed announces that t

Suppose oil prices suddenly begin to rise and the Fed announces that the increase in oil prices are not expected to generate excessive inflation.

If the Fed is incorrect in its assumption that rising oil prices will not generate excessive inflation and the inflation rate increases before the Fed takes corrective action, then other things equal, this would result in ________ and ________. A) the IS curve shifting to the right; a movement up the Phillips curve
B) the IS curve shifting to the left; a movement down the Phillips curve
C) the MP curve shifting up; a movement up the Phillips curve
D) the MP curve shifting down; a movement down the Phillips curve

ANSWER

A