Which of the following has been advanced as a rationale behind the construction of an expectations-augmented Phillips curve?
A) Imperfect information
B) Wage lags caused by long-term contracts
C) Wage sensitivity to expected inflation
D) All of the above
E) None of the above

Question

Quizplus · Accepted Answer

The expectations-augmented Phillips curve incorporates all these factors: imperfect information, wage lags due to long-term contracts, and wage sensitivity to expected inflation, to explain the relationship between inflation and unemployment more accurately.

Which of the Following Has Been Advanced as a Rationale