The Short-Run Phillips Curve Shifting Down Following the 1989 Bank

question 47

Multiple Choice

The short-run Phillips curve shifting down following the 1989 Bank of Canada announcement that they were adopting inflation targets shows that workers and firms

• A)had adaptive expectations.
• B)had rational expectations and that they trusted Bank of Canada announcements.
• C)preferred high unemployment to high inflation.
• D)consistently ignored inflation when setting nominal wages.
• E)Both A and B are correct answers.

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