Answer to Question #64380 in Microeconomics for Uaha Sharma

Question

explain how inflatiob unemployment trade off is not feasible under adaptive expf
fectation

Answer 1

The relationship between unemployment and inflation do not exist in the model of adaptive expectations, because expectations are adaptive process by which people form their expectations about what will happen in the future based on what happened in the past. For example, if inflation was higher than expected in the past, people will view the hope for the future. That is why in this case inflation does not depend on the unemployment.