The coordination approach to the Phillips curve focuses on the fact that
A)administrations have problems coordinating fiscal policy with the monetary policy of the central bank
B)long-term labor contracts tend to expire at different times, so firms cannot coordinate their hiring
C)unemployed workers are not organized enough to influence wage negotiations
D)firms are unsure about their competitors' behavior and are therefore reluctant to change wages and prices following a change in aggregate demand
E)workers have only imperfect information about their real wages

Question

Quizplus · Accepted Answer

The coordination approach to the Phillips curve emphasizes the difficulty of firms in coordinating their wage and price adjustments when faced with changes in aggregate demand. This is due to the uncertainty surrounding the behavior of competitors and the reluctance of firms to make the first move in changing wages and prices.

The Coordination Approach to the Phillips Curve Focuses on the Fact