In the short run, there _____ a trade-off between inflation and unemployment, and in the long run, there _____ a trade-off between inflation and unemployment.
A) is; is
B) is; is not
C) is not; is
D) is not; is not

Question

Quizplus · Accepted Answer

In the short run, according to the Phillips Curve, there is generally a trade-off between inflation and unemployment, meaning as one decreases, the other tends to increase, and vice versa. However, in the long run, the Phillips Curve becomes vertical according to the natural rate hypothesis, indicating that there is no trade-off between inflation and unemployment; the economy adjusts to a natural rate of unemployment regardless of inflation.

In the Short Run, There _____ a Trade-Off Between Inflation