Multiple Choice
Assume that expected inflation is based on the following: πᵉt = θπt₋₁.An increase in θ will cause
A) an increase in the natural rate of unemployment.
B) a reduction in the natural rate of unemployment.
C) no change in the natural rate of unemployment.
D) inflation in period t to be more responsive to changes in unemployment in period t.
Correct Answer:
Verified
Correct Answer:
Verified
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