If expected inflation increases, the same level of unemployment will be associated with:
A)a higher rate of inflation.
B)a lower rate of inflation.
C)the same rate of inflation.
D)no inflation.

Question

Quizplus · Accepted Answer

When expected inflation increases, it typically leads to higher actual inflation for the same level of unemployment, according to the Phillips Curve concept, which illustrates an inverse relationship between the rate of unemployment and the rate of inflation in an economy.

If Expected Inflation Increases, the Same Level of Unemployment Will