In the early 1960s,the discovery of the Phillips curve relationship caused economists and policy makers to think that they understood the tradeoffs between
A)aggregate supply and aggregate demand
B)excess aggregate supply and excess aggregate demand
C)inflation and unemployment
D)monetary and fiscal policy
E)rule-making and discretionary policy

Question

Quizplus · Accepted Answer

The Phillips curve relationship suggested that there was an inverse relationship between inflation and unemployment. Therefore, policy makers believed they could manipulate one variable to achieve their desired outcome in the other. This demonstrates an understanding of the tradeoffs between inflation and unemployment.

In the Early 1960s,the Discovery of the Phillips Curve Relationship