Assume that the Phillips curve equation is represented by nt - nt- 1 = (m + z) - aut. An increase in the unemployment rate will cause:
A) an increase in the markup over labour costs.
B) an increase in the inflation rate over time.
C) a decrease in the markup over labour costs.
D) a decrease in the inflation rate over time.
E) an increase in expected inflation.
Correct Answer:
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