If inflationary expectations on the part of the public increase, ...

[@Brianna17]

If inflationary expectations on the part of the public increase, the trade-off between inflation and unemployment becomes worse.
 
  Indicate whether the statement is true or false

Question 2

Refer to Figure 26-12. In the dynamic AD-AS model, if the economy is at point A in year 1 and is expected to go to point B in year 2, the Federal Reserve would most likely
 
  A) not change interest rates. B) increase the inflation rate.
  C) increase interest rates. D) decrease interest rates.

[fromAlphatoOmega22]

Answer to Question 1

TRUE

Answer to Question 2

C