Both Milton Friedman and Edmund Phelps argued that
A) there was no trade-off between inflation and unemployment in the long run.
B) the Phillips curve represented a menu of policy choices in the long run.
C) permanently higher inflation was the cost of permanently lower unemployment in the long run.
D) permanently higher unemployment was the cost of permanently lower inflation in the long run.

Question

Quizplus · Accepted Answer

Both Milton Friedman and Edmund Phelps challenged the traditional view that there was a stable and inverse relationship between inflation and unemployment. They argued that in the long run there was no trade-off between the two variables, known as the natural rate of unemployment hypothesis. This means that attempts for policymakers to reduce unemployment through increasing inflation will only lead to temporary results, and in the long run, inflation will simply lead to higher prices and no reduction in unemployment.

Both Milton Friedman and Edmund Phelps Argued That