If people have rational expectations, the economy may not have to endure an unemployment rate as high as predicted by the short-run Phillips curve.
The statement is false.
The Phillips curve shows the relationship between inflation and unemployment. In the short-run, inflation and unemployment are inversely associated; as one amount will increase, the alternative decreases.
In the end, the unemployment rate is independent of inflation and the Phillips curve is vertical on the herbal fee of unemployment. Whilst actual inflation exceeds predicted inflation, unemployment exceeds the natural fee.
An increase in fee expectancies shifts the Phillips curve upward and makes the inflation-unemployment alternate-off much less favorable. in the end, the unemployment charge is unbiased of inflation and the Phillips curve is vertical at the natural price of unemployment.
Learn more about the Phillips curve here: https://brainly.com/question/28005556
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