Question
Can you please explain, the answer to this question my teacher published: Using the information in this chapter, label each of the following statements true,
Can you please explain, the answer to this question my teacher published: Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.
d. Policy makers can exploit the inflation-unemployment trade-off only temporarily.
True. In order to have a permanent inflation-unemployment trade-off wage setters need to systematically underpredict inflation, which is unlikely as they will learn over time.
What do they mean by this tradeoff? and what do they mean by underpredicting inflation?
Thank you.
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