When inflation is not a surprise,
A) the Phillips curve is downward sloping.
B) activist monetary policy has a real effect on the economy.
C) the economy is not at full-employment output.
D) it does not affect the unemployment rate.
E) the economy is expanding.

Question

Quizplus · Accepted Answer

When inflation is not a surprise, it does not affect the unemployment rate. This is because workers and firms have already adjusted their expectations and behavior to the expected inflation rate, resulting in no significant impact on unemployment.

When Inflation Is Not a Surprise