If Expectations Are Rational

Multiple Choice

If expectations are rational,

A) a predictable change in inflation can make the expected inflation rate deviate from the actual rate.
B) unemployment can exceed the full-employment rate even in the long run.
C) the difference between the actual inflation rate and the expected inflation rate must be a purely random number.
D) the inflation rate cannot be reduced without a period of high unemployment because the Phillips curve is downward sloping.