The original Phillips curve assumes that inflation is directly related to unemployment.
However, the formulation of expectations in the original Phillips curve does not require ΞΈ β 1.
Option (C) is incorrect because it assumes that ΞΈ β 1 is a necessary condition in the original Phillips curve.
The assumption of ΞΈ β 1 does not specifically apply to the original Phillips curve, making option (C) incorrect.
Year | Unemployment Rate (in percent) | Number of unemployed (in millions) | Labour Force Participation Rate (in percent) |
2010 | 15 | 30 | 70 |
2020 | 20 | 50 | 80 |