One Reason That the Phillips Curve "Broke Down" Is That

question 166

Multiple Choice

One reason that the Phillips curve "broke down" is that it

• A)is unable to explain short-run movements in inflation and unemployment, but does a better job of explaining long-run movements.
• B)assumes a quick-acting self-correcting mechanism, and the economy has a very slow self-correcting mechanism.
• C)is a statistical relationship, and some of the points are not sustainable in the long run.
• D)cannot explain demand-side inflation, and it collapsed when demand-side inflation was predominant in the 1970s.