Milton Friedman and Edmund Phelps questioned
A)the use of expectations in the Phillips curve.
B)the stability of the relationship between inflation and unemployment.
C)the existence of a natural rate of unemployment.
D)the existence of a full-employment level of output.

Question

Quizplus · Accepted Answer

Milton Friedman and Edmund Phelps are known for challenging the traditional Phillips curve concept by arguing that the relationship between inflation and unemployment is not stable in the long run, leading to the development of the expectations-augmented Phillips curve. They introduced the idea of a natural rate of unemployment, suggesting that attempts to maintain unemployment below this natural rate would lead to accelerating inflation.

Milton Friedman and Edmund Phelps Questioned