If Firms and Workers Have Rational Expectations, Including Knowledge of the Policy

Multiple Choice

If firms and workers have rational expectations, including knowledge of the policy being used by the Bank of Canada, the short-run Phillips curve will be

A) negatively sloped.
B) positively sloped.
C) vertical.
D) flatter in the long run than it is in the short run.
E) steeper in the short run than it is in the long run.