The inflation associated with the oil embargoes of the 1970s illustrated the _____ of the downward-sloping Phillips curve in the long run,as unemployment _____ during this period.

Question

Quizplus · Accepted Answer

The question is asking about the long run, and in the long run, the Phillips curve is believed to be vertical or nearly vertical, meaning that there is no trade-off between inflation and unemployment. Therefore, the correct answer is C, fallacy; rose, as inflation and unemployment both increased during the oil embargo period, contrary to the downward slope of the Phillips curve.

The Inflation Associated with the Oil Embargoes of the 1970s