According to the Phillips curve analysis, a fall in inﬂationary expectations in an economy would:
A) lead to higher nominal wages in the long run.
B) not affect unemployment in the long run.
C) lead to an increase in unemployment in the long run.
D) increase the real wage in the long run.

Question

Quizplus · Accepted Answer

The Phillips curve suggests that in the long run, inflation expectations do not affect the natural rate of unemployment, implying that unemployment will not be impacted in the long run by changes in inflationary expectations.

According to the Phillips Curve Analysis, a Fall in Inﬂationary