The Modern View of the Phillips Curve Indicates That Expansionary

question 162

Multiple Choice

The modern view of the Phillips curve indicates that expansionary macroeconomic policy

• A)will reduce the unemployment rate if policy makers are willing to accept the required rate of inflation.
• B)will reduce the unemployment rate only when people underestimate the inflationary effects of the expansionary policy.
• C)will reduce the unemployment rate only when people overestimate the inflationary effects of the expansionary policy.
• D)will reduce the unemployment rate if people accurately anticipate the inflationary effects of the expansionary policy.