According to the natural rate hypothesis, there is:
A) a permanent trade-off between inflation and unemployment.
B) no permanent trade-off between inflation and unemployment.
C) a permanent trade-off between expectations and the Phillips curve.
D) no permanent trade-off between expectations and the Phillips curve.

Question

Quizplus · Accepted Answer

The natural rate hypothesis posits that there is no permanent trade-off between inflation and unemployment, suggesting that attempts to reduce unemployment below the natural rate through monetary policy will only lead to higher inflation in the long run without achieving lower unemployment.

According to the Natural Rate Hypothesis, There Is