What Did Friedman and Phelps Argue About Inflation and Unemployment

question 169

Multiple Choice

What did Friedman and Phelps argue about inflation and unemployment?

• A) that in the long run, monetary growth did not influence those factors that determine the unemployment rate
• B) that the Phillips curve could be exploited in the long run by using monetary, but not fiscal policy
• C) that the short-run Phillips curve was very steep but the long-run curve was very flat
• D) that there was neither a short-run nor long-run tradeoff between inflation and unemployment

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Definitions:

Cost Of Living Adjustment

An increase in income to match the rise in the price of goods and services, maintaining the purchasing power in inflationary times.

Social Security Recipients

Social Security recipients are individuals who receive benefits from the Social Security program, which is a government-run program providing financial assistance to people with disabilities, retirees, and their survivors.

Labor Contracts

Agreements between employers and employees or their representatives outlining terms of employment, wages, hours, conditions, and other workplace matters.

Frictional Unemployment

A type of unemployment that occurs when workers are between jobs, either because they are searching for new positions or are transitioning from one job to another.