Figure 33-8

-In Figure 33-8, policymakers can choose which of the following points as sustainable inflation-unemployment combinations?

Question

Figure 33-8
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-In Figure 33-8, policymakers can choose which of the following points as sustainable inflation-unemployment combinations?

Quizplus · Accepted Answer

The sustainable inflation-unemployment combinations are those points on the long-run Phillips curve, where the curve is vertical, indicating that there is no trade-off between inflation and unemployment. These points correspond to the natural rate of unemployment, which is the rate at which the economy is in long-run equilibrium. In Figure 33-8, the only points that correspond to vertical Phillips curve are B, E, and C. Therefore, the best choice is D which includes B, E, and C.

Figure 33-8 ​

Figure 33-8