The analysis of Friedman and Phelps can be summarized in the following equation where a is positive number:
A) Unemployment Rate = Natural Rate of Unemployment - a(Actual Inflation - Expected Inflation) .
B) Unemployment Rate = Natural Rate of Unemployment - a(Expected Inflation - Actual Inflation) .
C) Unemployment Rate = Expected Rate of Inflation - a(Actual Inflation - Expected Inflation) .
D) Unemployment Rate = Actual Rate of Inflation - a(Actual Unemployment - Expected Unemployment) .
Correct Answer:
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