According to current thinking about the Phillips curve, what is the best action for policymakers to take?
A) Stimulate permanent shifts in aggregate demand.
B) Stimulate permanent shifts in aggregate supply.
C) Focus on controlling inflation.
D) Focus on controlling unemployment.

Question

According to current thinking about the Phillips curve, what is the best action for policymakers to take?  
A) Stimulate permanent shifts in aggregate demand. 
B) Stimulate permanent shifts in aggregate supply. 
C) Focus on controlling inflation. 
D) Focus on controlling unemployment.

Quizplus · Accepted Answer

According to current thinking about the Phillips Curve, there is no long-run trade-off between inflation and unemployment. Policymakers should focus on controlling inflation in the long run, as stimulating permanent shifts in aggregate demand or supply is not a sustainable solution.

According to Current Thinking About the Phillips Curve, What Is