According to Friedman and Phelps, the unemployment rate is equal to
A)(the natural rate) + a(the expected inflation rate).
B)(the natural rate) - a(the expected inflation rate).
C)(the expected inflation rate) + (the actual inflation rate).
D)(the natural rate) - a(the actual inflation rate - the expected inflation rate).

Question

Quizplus · Accepted Answer

According to Friedman and Phelps, the unemployment rate is equal to the natural rate of unemployment minus a coefficient times the difference between the actual inflation rate and the expected inflation rate. This can be written as: 
Unemployment rate = natural rate - a(actual inflation rate - expected inflation rate)

According to Friedman and Phelps, the Unemployment Rate Is Equal