The expectations-augmented Phillips curve identifies several ways to reduce inflation. They include
A) running the economy near its potential.
B) working to lower expected inflation by policy and encouragement.
C) reducing the sensitivity of prices to gaps between actual and potential GDP by rigidly controlling prices and wages.
D) eliminating a government spending surplus whenever actual GDP falls short of potential GDP.
E) none of the above.

Question

Quizplus · Accepted Answer

The expectations-augmented Phillips curve suggests that managing expectations of inflation through policy and communication can help reduce actual inflation.

The Expectations-Augmented Phillips Curve Identifies Several Ways to Reduce Inflation