Question: If expectations are rational, a. a predictable change in inflation can make the expected inflation rate deviate from the actual inflation rate. b. unemployment can
If expectations are rational,
a. a predictable change in inflation can make the expected inflation rate deviate from the actual inflation rate.
b. unemployment can exceed the full-employment rate even in the long run.
c. the inflation rate cannot be reduced without a sustained period of high unemployment because the short-run Phillips curve is downward sloping.
d. an increase in aggregate demand due to government policy will not necessarily increase real output.
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