Assume That Expected Inflation Is Based on U E =

Assume that expected inflation is based on u e = 8nt- 1. An increase in 8 will cause:

A) an increase in the natural rate of unemployment.
B) inflation in period t to be more responsive to changes in unemployment in period t.
C) a decrease in the natural rate of unemployment.
D) inflation in period t to be less responsive to changes in unemployment in period t.
E) no change in the natural rate of unemployment.