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:

Excess Demand

A situation in a market where the quantity demanded of a good or service surpasses the quantity supplied at the current price.

Quantity Demanded

Quantity demanded is the total amount of a good or service that consumers are willing and able to purchase at a given price in a specified period.

DVD Players

Electronic devices designed to play discs using the Digital Versatile Disc (DVD) format, often used for movies and other digital content.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price in a market.