Friedman and Phelps Concluded That

question 119

Multiple Choice

Friedman and Phelps concluded that

• A)in the long run the Phillips curve is downward sloping,which is consistent with classical theory.
• B)in the long run the Philips curve is downward sloping,which is inconsistent with classical theory.
• C)in the long run the Phillips curve is vertical,which is consistent with classical theory.
• D)in the long run the Phillips curve is vertical,which is inconsistent with classical theory.

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Definitions:

Portfolio Returns

The gain or loss on an investment portfolio, measured over a specific period of time.

Uncorrelated

Describes a situation where two or more variables do not have a linear relationship, meaning the change in one variable does not predict the change in another.

Standard Deviation

A metric that reflects the degree of spread or divergence in a group of values, revealing how far the values stray from the central value.

Portfolio

A portfolio consists of various financial assets such as stocks, bonds, commodities, cash, and equivalents like closed-end funds and ETFs (Exchange Traded Funds).