A common explanation for the behavior of the short-run U.S. Phillips curve in 2009 and 2010 is that, over the previous 20 or so years, the Federal Reserve had
A)established a lot of credibility in its commitment to keep inflation at about 2 percent.
B)established a lot of credibility in its commitment to keep inflation at about 5 percent.
C)failed to establish significant credibility in its announced intent to keep inflation at about 2 percent.
D)failed to establish significant credibility in its announced intent to keep inflation at about 5 percent.

Question

Quizplus · Accepted Answer

The Federal Reserve had established credibility in its commitment to keep inflation around 2 percent, which influenced expectations and the behavior of the short-run Phillips curve during 2009 and 2010.

A Common Explanation for the Behavior of the Short-Run U