The Basic Assertion of Those Who Argue That the Long-Run

question 14

Multiple Choice

The basic assertion of those who argue that the long-run Phillips curve is vertical is that

• A) both unemployment and price stability can be achieved through proper discretionary monetary and fiscal policies.
• B) over the long run, the Phillips curve is useful for making economic policy tradeoffs between inflation and unemployment.
• C) inflation is caused by cost-push forces and can be reduced only by wage and price controls.
• D) expansionary monetary and fiscal policies improve the rate of unemployment only temporarily because they also change inflationary expectations.
• E) the natural rate of unemployment will fall to zero over time.