(I) In the 1960s and 1970s, most economists believed that there was a permanent trade-off between inflation and unemployment.
(II) Today, most economists believe there is no permanent trade-off between inflation and unemployment.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.

Question

(I)   In the 1960s and 1970s, most economists believed that there was a permanent trade-off between inflation and unemployment.
(II)  Today, most economists believe there is no permanent trade-off between inflation and unemployment.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.

Quizplus · Accepted Answer

In the 1960s and 1970s, the Phillips Curve suggested a trade-off between inflation and unemployment, which many economists believed to be permanent. However, today, the consensus is that this trade-off is not permanent, as expectations adjust and the long-term Phillips Curve is vertical, indicating no trade-off.

(I) in the 1960s and 1970s, Most Economists Believed That