Suppose the actual inflation rate exceeds the expected inflation rate.Which of the following best describes what is required to maintain the existing unemployment rate in the long run?
A) increasing economic growth
B) decreasing economic growth
C) increasing inflation
D) decreasing inflation

Question

Suppose the actual inflation rate exceeds the expected inflation rate.Which of the following best describes what is required to maintain the existing unemployment rate in the long run?  
A) increasing economic growth 
B) decreasing economic growth 
C) increasing inflation 
D) decreasing inflation

Quizplus · Accepted Answer

To maintain the existing unemployment rate when actual inflation exceeds expected inflation, the economy may need to adjust by accepting higher inflation to keep unemployment stable, according to the Phillips Curve concept.

Suppose the Actual Inflation Rate Exceeds the Expected Inflation Rate