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Given an Expectations-Augmented Phillips Curve and a Policy Designed to Maintain

Question 72

Multiple Choice

Given an expectations-augmented Phillips curve and a policy designed to maintain actual GDP higher than its potential indefinitely,


A) any set of inflationary expectations other than zero produces constant, positive inflation and unemployment below the natural rate.
B) any set of inflationary expectations other than zero produces accelerating prices with unemployment above the natural rate.
C) any set of inflationary expectations produces accelerating prices with unemployment below the natural rate.
D) any set of inflationary expectations other than zero produces decelerating inflation with unemployment below the natural rate.
E) none of the above.

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