Which of the following is true?
A) The Phillips curve trade-off holds in the long run but not necessarily in the short run because of randomness in markets.
B) A.W. Phillips' original work related changes in unemployment and changes in prices; later economists demonstrated that there was also a trade-off between changes in prices and changes in unemployment.
C) In the short run, there is a trade-off between inflation and unemployment even if the change in aggregate demand is expected.
D) Although a trade-off exists in the short run, in the long run, the Phillips curve is vertical.

Question

Quizplus · Accepted Answer

Although there is a trade-off between inflation and unemployment in the short run, in the long run, the Phillips curve is vertical as it is driven by supply-side factors such as technological advancements and changes in productivity. This means that there is no permanent trade-off between inflation and unemployment in the long run.

Which of the Following Is True