In the 1960s,many economists and policy makers considered the trade-off between inflation and unemployment revealed in the Phillips curve to be permanent.This belief was challenged by ________,who argued that there is no trade-off between inflation and unemployment and the long run.

Question

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Milton Friedman and Edmund Phelps challenged the idea of a permanent trade-off between inflation and unemployment in the 1960s. They argued that there may be a short-term trade-off, but in the long run, inflationary expectations would adjust and eliminate the trade-off. This idea came to be known as the natural rate of unemployment or the NAIRU (non-accelerating inflation rate of unemployment). Robert Lucas and Thomas Sargent, and Finn Kydland and Edward Prescott also contributed to this macroeconomic theory. However, the question specifically asks about who challenged the Phillips curve trade-off, which was primarily Friedman and Phelps.

In the 1960s,many Economists and Policy Makers Considered the Trade-Off