How Does the Lucas Critique Relate to Analysis Using the Simple

question 2

Multiple Choice

How does the Lucas critique relate to analysis using the simple Phillips curve? The Lucas critique:

• A) supports analysis using the simple Phillips curve.
• B) explains why the relationship depicted in the simple Phillips curve may not hold.
• C) supports movement along a simple Phillips curve but only when policy changes cause the movement.
• D) indicates that there are no conditions when the simple Phillips curve is accurate.

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