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A Difference Between the Inflation-Expectations-Augmented Phillips Curve and the Phillips

Question 43

Multiple Choice

A difference between the inflation-expectations-augmented Phillips curve and the Phillips curve that is based on rational expectations is that


A) in the latter people never make incorrect forecasts
B) in the latter monetary policy changes cannot affect the rate of inflation
C) in the former a change in monetary policy causes an immediate shift in the Phillips curve
D) in the former expected inflation is always equal to actual inflation
E) none of the above

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