Economist A.W.Phillips believed that
A)the Fed should follow a policy rule because it does not know the lag structure
B)the Fed should follow a policy rule to avoid monetary surprises
C)there is an inverse relationship between inflation and unemployment
D)private sector spending is inherently unstable
E)government spending is inherently unstable

Question

Quizplus · Accepted Answer

A.W. Phillips is known for his work on the Phillips Curve, which shows an inverse relationship between inflation and unemployment. Phillips believed that policymakers could use this relationship to design policies that could simultaneously target both inflation and unemployment. This has led to the development of policy rules that aim to stabilize inflation and unemployment, such as the Taylor Rule.

Economist A.W.Phillips Believed That