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Question
Economists Milton Friedman and E.S. Phelps suggested that the apparent trade -off suggested by the Phillips curve could not be exploited by policy makers, because
A) economic participants routinely incorporate changes in the inflation rate into their expectations.
B) economic participants are not rational, and therefore act unpredictably to any policy change.
C) unemployment levels and the inflation rate have a clear, positive relationship.
D) unemployment levels and the inflation rate have a negative (inverse) relationship.
Answer
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