If expectations are rational,

A. a predictable change in inflation can make the expected inflation rate deviate from the actual rate.
B. unemployment can exceed the full-employment rate even in the long run.
C. the difference between the actual inflation rate and the expected inflation rate must be a purely random number.
D. the inflation rate cannot be reduced without a period of high unemployment because the Phillips curve is downward sloping.


Answer: C

Economics

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