Disinflation can be explained by the Phillips Curve analysis as resulting from a situation where the actual rate of inflation is initially less than the expected rate, causing the unemployment rate to
A)rise temporarily.However, consequent decreases in nominal wages will eventually bring the actual and expected rates of inflation into balance.
B)rise temporarily.However, consequent increases in nominal wages will eventually bring the actual and expected rates of inflation into balance.
C)fall temporarily.However, consequent increases in nominal wages will eventually bring the actual and expected rates of inflation into balance.
D)fall temporarily.However, consequent decreases in nominal wages will eventually bring the actual and expected rates of inflation into balance.

Question

Quizplus · Accepted Answer

Disinflation occurs when the actual rate of inflation is less than the expected rate, leading to a temporary rise in unemployment. As nominal wages decrease, the actual and expected rates of inflation eventually align.

Disinflation Can Be Explained by the Phillips Curve Analysis as Resulting