The Theory Behind the Long-Run Phillips Curve Relationship Is That

question 83

Multiple Choice

The theory behind the long-run Phillips curve relationship is that

• A) people's expectations of future inflation are based on their most recent experiences.
• B) people form expectations on the basis of all available information.
• C) monetary policy has real effects in the long run.
• D) inflation stimulates the economy,and this outcome reduces the unemployment rate.
• E) prices are flexible in the long run,causing no relationship between unemployment and inflation.

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