Believers in the Hypothesis of Rational Expectations Argue That

question 74

Multiple Choice

Believers in the hypothesis of rational expectations argue that:

• A)​expansionary fiscal and monetary policy can reduce unemployment without creating inflation.
• B)​a trade-off exists between unemployment and inflation even in the long run.
• C)​the Phillips curve is vertical even in the short run for expected changes in inflation.
• D)​the Phillips curve is downward sloping even in the long run.

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