An increase in aggregate demand temporarily reduces unemployment, but after people raise their expectations of inflation, unemployment returns to the natural rate.
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Q1: The original Phillips curve illustrates the
A) trade-off
Q2: If, in the long run, people adjust
Q4: When unemployment is below the natural rate
Q5: If people have rational expectations, an announced
Q6: One explanation that economists offer to explain
Q7: The Phillips curve is an extension of
Q8: The natural rate of unemployment is
A) the
Q9: An increase in price expectations shifts the
Q10: For centuries economists have puzzled over the
Q11: An increase in expected inflation
A) shifts the
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