What Did Friedman and Phelps Argue About the Effectiveness of Monetary

question 189

Multiple Choice

What did Friedman and Phelps argue about the effectiveness of monetary policies?

• A) As long as people's inflation expectations were fixed, an increase in the money supply growth rate could not change output in the short or long run.
• B) If people's inflation expectations were fixed, in the short run, a decrease in the money supply growth rate could raise output and unemployment.
• C) When the money supply growth rate changed, people would eventually revise their inflation expectations so that any change in unemployment created by an increase in the money supply growth rate would be temporary.
• D) When the money supply growth rate changes, people slowly adjust their inflation expectations; therefore, the unemployment rate changes only in the long run but not in the short run.

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Definitions:

Public Office

Positions of authority or service in a government or community, held by individuals tasked with serving the public interest.

Non-Discrimination

The principle of treating all people equally, without bias towards race, gender, age, or other characteristics.

Institutional Racism

A form of racism that is embedded through laws, regulations, and customary practices within society or an organization, systematically disadvantaging certain racial groups.

Systematic Differences

Variation or disparities that are structured and consistent within a system.