By about 1973,U.S.policymakers had learned that
A)Friedman and Phelps's analysis of inflation and unemployment had been correct.
B)the short-run Phillips curve shifts when expectations of inflation change.
C)there is no long-run trade-off between inflation and unemployment.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

By about 1973, policymakers had learned that Friedman and Phelps's analysis of inflation and unemployment was correct, which implied that the short-run Phillips curve shifts when expectations of inflation change. Furthermore, policymakers had come to understand that there was no long-run trade-off between inflation and unemployment, as stated by the natural rate hypothesis. Therefore, all of the options (A, B, and C) are correct.

By About 1973,U.S.policymakers Had Learned That