Based on the long-run Phillips curve, we can conclude that expected inflation plays:
A)no role in determining inflation.
B)a minor role in determining inflation.
C)an important role in determining inflation.
D)an uncertain role in determining inflation.

Question

Quizplus · Accepted Answer

The long-run Phillips curve suggests that expected inflation plays an important role in determining actual inflation, as it reflects the adaptive expectations of firms and workers regarding future price levels, influencing wage and price setting behavior.

Based on the Long-Run Phillips Curve, We Can Conclude That