The inflation associated with the oil embargoes of the 1970s illustrated the __________ of the downward-sloping Phillips curve in the long run,as unemployment __________.
A)validity; fell
B)validity; rose
C)fallacy; rose
D)fallacy; fell
E)fallacy; did not change

Question

Quizplus · Accepted Answer

The oil embargoes of the 1970s led to stagflation, where inflation rose while unemployment also increased, demonstrating the fallacy of the Phillips curve in the long run, which suggests an inverse relationship between inflation and unemployment.

The Inflation Associated with the Oil Embargoes of the 1970s