If an expectations-augmented Phillips curve were to be used to explain the experience of the United States in the 1950s and 1960s, it would have to include
A) expected rates of inflation that were climbing rapidly from year to year.
B) expected rates of inflation that were falling sharply from year to year.
C) expected rates of inflation that were equal to some positive constant over the entire period.
D) expected rates of inflation that were approximately zero over the entire period.
E) none of the above.

Question

Quizplus · Accepted Answer

During the 1950s and 1960s in the United States, inflation was relatively low and stable, leading to expectations of inflation that were approximately zero or very low. This period did not experience the rapid increases or sharp falls in inflation expectations that would characterize later decades.

If an Expectations-Augmented Phillips Curve Were to Be Used to Explain