Tax Cuts in the United States: Analyzing the Impact on the Phillips Curve

Decreasing taxes on a limited amount of people is more likely to influence spending behavior and overall gross domestic product in the short run. In effect, it can contribute to temporarily higher inflation and lower unemployment as individuals spend more. However, it's important to note that Phillips Curve is a theory that stipulates a supposed inverse relationship between rates of unemployment and corresponding rates of rises in wages that result within an economy. Hence, this specific situation would be best described as "Movement along the Short Run Phillips Curve down and right." The Short Run Phillips Curve may shift right or left due to changes in expectations about future inflation or changes in structural characteristics in the economy, which is not specifically mentioned in this scenario.