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If People in a Country That Has Had Persistently High

Question 92

Multiple Choice

If people in a country that has had persistently high inflation expect it to remain high and are skeptical of promises the central bank makes, then the Phillips curve is


A) farther to the left than otherwise. If the central bank tries to reduce inflation unemployment will rise by more than if people had believed its promises.
B) farther to the left than otherwise. If the central bank tries to reduce inflation unemployment will rise by less than if people had believed its promises.
C) farther to the right than otherwise. If the central bank tries to reduce inflation unemployment will rise by more than if people had believed its promises
D) farther to the right than otherwise. If the central bank tries to reduce inflation unemployment will rise by less than if people had believed its promises..

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