According to supply-siders
A)there exists a temporary tradeoff between higher inflation and higher output growth.
B)there exists a permanent tradeoff between higher inflation and higher output growth.
C)there exists no tradeoff between higher inflation and higher output growth.
D)there exists a temporary tradeoff between higher inflation and higher output growth during periods of low inflation only.

Question

Quizplus · Accepted Answer

According to supply-siders, there is no tradeoff between higher inflation and higher output growth. They believe that policies aimed at reducing inflation (such as restrictive monetary policy) can also stimulate higher output growth. This is based on the idea that lower inflation expectations will lead to lower interest rates, which in turn will encourage investment and economic activity. Therefore, they argue that policies aimed at reducing inflation can actually lead to higher economic growth in the long run, without sacrificing price stability.

According to Supply-Siders