Friedman and Phelps argued that it was dangerous to think of the short-run Phillips curve as a menu of options for policymakers to choose from. Explain the logic of their argument
Eventually the economy moves back to the natural rate of unemployment. Unemployment falls when inflation is greater than expected, but continued higher inflation eventually raises expected inflation reversing the decline in unemployment. Policy that shifts aggregate demand can only affect output and unemployment in the short run.
You might also like to view...
Refer to Figure 5-7. The marginal benefit of reducing pollution curve is the same curve as
A) the supply of pollution reduction curve. B) the demand for pollution reduction curve. C) the external benefit curve. D) the positive externality curve.
Collusion of firms is legal in the United States
a. True b. False Indicate whether the statement is true or false
The World Bank defines severe poverty as
A. An income level of less than $3.10 per person per day. B. An income level that does not allow an individual to buy basic necessities. C. An income level of less than $1.25 per person per day. D. An extreme lack of food.
Figure 2-4
Which production possibilities frontier(s) in depict(s) a situation in which all resources are perfect substitutes in production?
a.
both C and E
b.
both D and E
c.
C
d.
D
e.
E