One implication of the Phillips curve analysis is that:
a. unemployment rates below the natural rate are only possible in the long run.
b. unemployment rates below the natural rate lead to falling rates of inflation in the long run.
c. if inflationary expectations are accurate, the economy is on the short-run Phillips curve but not on the long-run Phillips curve.
d. unemployment rates below the natural rate may be achieved only with rising inflation rates.
e. the natural rate of unemployment is strictly a short-run phenomenon.
Question 2
The short-run Phillips curve is based upon labor contracts that reflect a given expected _____.
a. price level
b. unemployment level
c. money supply
d. aggregate demand
e. unemployment rate
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