According to Friedman and Phelps, when do policymakers face a tradeoff between inflation and unemployment?
A)only in the long run
B)only in the short run
C)in neither the long run nor short run
D)in both the short run and long run

Question

Quizplus · Accepted Answer

Friedman and Phelps argued that the tradeoff between inflation and unemployment, as depicted by the Phillips Curve, exists only in the short run. In the long run, expectations adjust, and the economy returns to the natural rate of unemployment, eliminating the tradeoff.

According to Friedman and Phelps, When Do Policymakers Face a Tradeoff