The Phillips curve analysis described in Chapter 13 implies that there is a negative tradeoff between inflation and unemployment in:
A) both the short run and long run.
B) in the short run only.
C) in the long run only.
D) in neither the short run nor the long run.

Question

Quizplus · Accepted Answer

The Phillips curve analysis suggests that there is a negative relationship between inflation and unemployment in the short run, but this relationship does not hold in the long run. In the long run, changes in the level of inflation have no effect on the level of employment.

The Phillips Curve Analysis Described in Chapter 13 Implies That