Incorporation of expectations into economic decision making and the economic experience of recent decades indicate that in the long run
A) inflation relates directly to unemployment.
B) inflation is inversely related to unemployment.
C) there is no trade-off between inflation and unemployment.
D) high unemployment is a primary cause of inflation.

Question

Quizplus · Accepted Answer

The incorporation of expectations into economic decision making and the economic experience of recent decades indicate that there is no trade-off between inflation and unemployment in the long run. This is known as the long-run Phillips Curve, where unemployment eventually returns to its natural rate and inflation remains stable.

Incorporation of Expectations into Economic Decision Making and the Economic