The idea that the long-run Phillips curve is
A)vertical stems from the analysis of Samuelson and Solow.
B)vertical stems from the analysis of Friedman and Phelps.
C)vertical was disproved by the experiment that monetary and fiscal policymakers inadvertently created in the 1970s.
D)downward-sloping can be correct if unemployment responds very quickly to unexpected inflation.

Question

Quizplus · Accepted Answer

The vertical Phillips curve was proposed by Friedman and Phelps, who argued that in the long run, changes in the rate of inflation have no effect on the rate of unemployment. This is because people's expectations adjust to changes in inflation, leading to a natural rate of unemployment that is independent of the actual rate of inflation.

The Idea That the Long-Run Phillips Curve Is