Multiple Choice
According to rational expectations theory:
A) a large reduction in unemployment can be achieved with a relatively small increase in inflation.
B) people are not easily fooled by changes in government fiscal policy.
C) inflation rates that rise 3 percentage points each year will keep unemployment below its natural rate for a sustained period of time.
D) the Phillips curve will slope downward to the right, if people correctly anticipate the inflation rate.
E) none of the above is true.
Correct Answer:
Verified
Correct Answer:
Verified
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