Incorporation of expectations into economic decision making indicates that in the long run:
A)inflation relates directly to unemployment.
B)inflation is inversely related to unemployment.
C)the Phillips curve is vertical at the natural rate of unemployment.
D)high unemployment is a primary cause of inflation.

Question

Quizplus · Accepted Answer

In the long run, expectations adjust, making the Phillips curve vertical at the natural rate of unemployment, indicating no trade-off between inflation and unemployment.

Incorporation of Expectations into Economic Decision Making Indicates That in the Long