If the Phillips curve aids in forecasting inflation then
A) forecast errors from an alternative forecasting procedure should not be correlated with output fluctuations.
B) there should be no correlation between forecast errors from an alternative forecasting procedure and output fluctuations.
C) the Phillips curve is upward-sloping.
D) the Phillips curve is downward-sloping.
Question 2
Inflation leads to ________.
A) increased variability of relative prices only when it is anticipated
B) increased variability of relative prices only when it is unanticipated
C) increased variability of relative prices whether inflation is anticipated or not
D) lower variability of the general price level only when it is very high
E) none of the above
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