Suppose that the central bank in this economy is concerned that inflation is too high and...

Suppose that the central bank in this economy is concerned that inflation is too high and wants to lower the inflation rate by 6 percentage points per year. A reduction in the rate of inflation is known as d sinflation . To reduce inflation from 8% to 2% in the short run, the central bank would have to accept an unemployment rate of ____________ .

True or False:

If people have rational expectations, the economy may not have to endure an unemployment rate as high as predicted by the short-run Phillips curve.

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Expert Solution

Rahul Sunny answered 1 year ago

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