Assume the analysis of Friedman and Phelps is correct, so that the following equation is valid: Unemployment rate = Natural rate of unemployment - a * ctual inflation - x).In this equation,
A)a is a parameter that measures how much actual inflation responds to expected inflation.
B)a = 0 at the point of intersection of the short-run and long-run Phillips curves.
C)x is the expected rate of inflation.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

In the given equation, 'x' represents the expected rate of inflation, which is subtracted from actual inflation to determine its effect on the unemployment rate.

Assume the Analysis of Friedman and Phelps Is Correct, So