A mistaken assumption about the simple Phillips curve is to assume that it:
A) represents a permanent trade-off between inflation and unemployment.
B) applies more to the short run than the long run.
C) shows a relationship between inflation and unemployment.
D) has a negative slope.

Question

Quizplus · Accepted Answer

The simple Phillips curve is often mistakenly assumed to represent a permanent trade-off between inflation and unemployment, which is not accurate for the long run. Over time, expectations adjust, and the trade-off does not hold, as explained by the concept of the natural rate of unemployment and the non-accelerating inflation rate of unemployment (NAIRU).

A Mistaken Assumption About the Simple Phillips Curve Is to Assume