Changes in economic circumstance
A) usually require the researcher to adjust the entire structure of an expectations-augmented Phillips curve.
B) usually can be accommodated in the expectations-augmented Phillips curve by adjusting the parameter values that reflect the sensitivity of inflation to market conditions.
C) usually cannot be accommodated by an expectations-augmented Phillips curve unless they involve a fundamental change in the structure of the labor market.
D) a and c.
E) none of the above.

Question

Quizplus · Accepted Answer

Changes in economic circumstances can typically be accommodated within the framework of an expectations-augmented Phillips curve by adjusting the parameters that reflect how sensitive inflation is to market conditions, rather than requiring a complete overhaul of the curve's structure or being unable to accommodate them at all unless there's a fundamental change in the labor market structure.

Changes in Economic Circumstance