The experience of Paul Volcker's fight against inflation during the late 1970s and early 1980s indicates that firms and workers

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The experience of Paul Volcker's fight against inflation during the late 1970s and early 1980s showed that firms and workers had adaptive expectations, meaning that they adjusted their behavior based on their past experiences with inflation. They did not have rational expectations and did not fully trust Fed announcements. Additionally, they preferred high unemployment to high inflation.

The Experience of Paul Volcker's Fight Against Inflation During the Late