1. In the Phillips curve equation, which of the following will cause an increase in the current inflation rate?

A. an increase in the expected inflation rate

B. a reduction in the unemployment rate

C. an increase in the markup, m

D. none of the above

E. all of the above

2. Which of the following assumptions best characterized the assumption about how individuals formed expectations of inflation by the early 1970s in the USA?

A. Expected inflation for the current year was smaller than the previous year's inflation rate

B. Expected inflation for the current year was less than the previous year's inflation rate C. Expected inflation for the current year was approximately equal to the previous year's inflation rate

D. Expected inflation for the current year equal to the average inflation rate over the past ten years

E. none of the above