Classical macroeconomists argue that the short-run Phillips curve ________ represent a usable trade-off for policymakers because ________.
A)does; people have rational expectations
B)does; people do not have rational expectations
C)does not; people do not have rational expectations
D)does not; people have rational expectations

Question

Quizplus · Accepted Answer

Classical macroeconomists argue that the short-run Phillips curve does not represent a usable trade-off for policymakers because people have rational expectations. This means that people anticipate changes in inflation and adjust their behavior accordingly, making it difficult for policymakers to use the Phillips curve trade-off to manipulate inflation and unemployment.

Classical Macroeconomists Argue That the Short-Run Phillips Curve ________ Represent