According to reasoning by Milton Friedman and Edmund Phelps:
A) economic stimulus programs were destined to fail in the long run.
B) economic stimulus programs were destined to fail in the short and long runs.
C) unemployment does not react to fluctuations in output.
D) there is a theoretical maximum level of potential output that can be produced.
E) firms do not react to real interest rate changes.

Question

Quizplus · Accepted Answer

Both Milton Friedman and Edmund Phelps believed that economic stimulus programs might have a short-term effect on output and employment, but in the long run, they would fail to sustain growth and create real wealth. They argued that economic growth needs to come from the private sector's productivity, innovation, and investment, not from government intervention. Therefore, answer A is the best choice.

According to Reasoning by Milton Friedman and Edmund Phelps