The Friedman natural rate theory holds that there is an inverse relationship between inflation and unemployment in the long run,but not in the short run.

Question

Quizplus · Accepted Answer

The Friedman natural rate theory actually posits that there is no trade-off between inflation and unemployment in the long run, meaning that attempts to reduce unemployment below its natural rate by increasing inflation only lead to higher inflation in the long run without affecting unemployment.

The Friedman Natural Rate Theory Holds That There Is an Inverse