For this question, assume that the Phillips curve equation is represented by the following equation: πt - πt-1 = (m + z) - αut. A reduction in the unemployment rate will cause A) a reduction in the markup over labor costs (i.e., a reduction in m). B) an increase in the markup over labor costs. C) an increase in the inflation rate over time. D) a decrease in the inflation rate over time. E) none of the above

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A:

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A: Answer to the question is as follows :

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A: Answer to the question is as follows:

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A: ANSWER STEP-1   Ans :- A The loss increases if Philips curve gets steeper or inelastic.

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