What can be concluded from Milton Friedman and Edmund Phelps' expectations-augmented Phillips curve?
A)that there is a long run tradeoff between unemployment and inflation
B)that there is a short run tradeoff between unemployment and inflation
C)that inflation is positively related to the unemployment gap
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The expectations-augmented Phillips curve suggests that in the short run, there is a tradeoff between unemployment and inflation. However, in the long run, there is no tradeoff, and any attempts to reduce unemployment below its natural rate will only result in higher inflation. The theory does not suggest that inflation is positively related to the unemployment gap, nor does it propose a long run tradeoff between unemployment and inflation.

What Can Be Concluded from Milton Friedman and Edmund Phelps