Assume the analysis of Friedman and Phelps is correct, so that the following equation is valid:
Unemployment rate = Natural rate of unemployment − a × (Αctual inflation − x) .
In this equation,
A) a is a parameter that measures how much actual inflation responds to expected inflation.
B) a = 0 at the point of intersection of the short-run and long-run Phillips curves.
C) x is the expected rate of inflation.
D) x = 0 when the actual rate of inflation equals the expected rate of inflation.
Correct Answer:
Verified
Q172: A change in expected inflation shifts
A)the short-run
Q173: Other things the same, if there is
Q174: Figure 35-3 Q175: In the long run, a decrease in Q176: Suppose the Fed decreased the growth rate![]()
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents