How is the unexpected inflation rate measured on the expectations-augmented Phillips curve?
A) expected inflation rate minus inflation rate
B) inflation rate minus expected inflation rate
C) expected inflation rate plus actual inflation rate
D) inflation rate divided by expected inflation rate

Question

Quizplus · Accepted Answer

The unexpected inflation rate on the expectations-augmented Phillips curve is measured as the actual inflation rate minus the expected inflation rate. This reflects the difference between what was anticipated and what actually occurred.

How Is the Unexpected Inflation Rate Measured on the Expectations-Augmented