Even if expectations of inflation are rational, sluggish ...

[809779]

Even if expectations of inflation are rational, sluggish adjustment of wages and prices will still create a short-run trade-off between inflation and unemployment.
 
  Indicate whether the statement is true or false

Question 2

In the dynamic aggregated demand and aggregate supply model, inflation occurs if
 
  A) SRAS shifts faster than AD. B) AD shifts slower than SRAS.
  C) LRAS shifts faster than AD. D) AD shifts faster than SRAS.

[janeli1]

Answer to Question 1

TRUE

Answer to Question 2

D