The Pattern of Employment and Inflation Observed During the 1970s

question 6

Multiple Choice

The pattern of employment and inflation observed during the 1970s appeared to confirm the view of Phelps and Friedman that

• A) the Phillips curve was upward sloping, not downward sloping as first thought.
• B) there was no trade-off between inflation and unemployment in the long run.
• C) the expected trade-offs did not occur, meaning that policy to lower unemployment rates would not cause inflation.
• D) the aggregate supply curve actually sloped downward because price levels fell when real GDP rose.

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