Milton Friedman argued that there is a ________ trade-off between unemployment and inflation and this trade-off comes from ________ inflation.
A)temporary; actual
B)temporary; unanticipated
C)permanent; actual
D)permanent; unanticipated

Question

Quizplus · Accepted Answer

According to Milton Friedman, there is a temporary trade-off between unemployment and inflation. This trade-off comes from unanticipated inflation, meaning that when inflation is higher than expected, it can temporarily decrease unemployment, but only in the short-run. Therefore, option A and C can be eliminated. Friedman did not believe in a permanent trade-off between unemployment and inflation, so option D can also be eliminated.

Milton Friedman Argued That There Is a ________ Trade-Off Between