Assume the analysis of Friedman and Phelps is correct,so that the following equation is valid:
Unemployment rate = Natural rate of unemployment - a × (Αctual 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

The variable x in the equation represents the expected rate of inflation, which is used to determine the deviation of actual inflation from expectations.

Assume the Analysis of Friedman and Phelps Is Correct,so That