Question: Answer the following about expectations: Explain the difference between rational and adaptive expectations. Describe the behavior of the Phillips Curve under rational and adaptive expectations.

  1. Answer the following about expectations:
    1. Explain the difference between rational and adaptive expectations.
    2. Describe the behavior of the Phillips Curve under rational and adaptive expectations.
    3. Describe a policy under adaptive expectations that would keep unemployment below equilibrium.

Would this policy work under rational expectations?

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