Samuelson and Solow reasoned that the trade-off between inflation and unemployment arose because low unemployment was associated with high aggregate demand, and because high demand puts upward pressure on wages and prices throughout the economy.

Question

Quizplus · Accepted Answer

Samuelson and Solow's reasoning was that there was a trade-off between inflation and unemployment because low unemployment was associated with high aggregate demand, which puts upward pressure on wages and prices throughout the economy.

Samuelson and Solow Reasoned That the Trade-Off Between Inflation and Unemployment