Based on the Reasoning of the Original Version of the Phillips

question 31

Multiple Choice

Based on the reasoning of the original version of the Phillips curve, conventional wisdom of the 1960s was that:

• A) money is not neutral.
• B) there is a strong positive relationship between unemployment and inflation.
• C) there is no relationship between economic growth and the savings rate.
• D) there is a permanent trade-off between inflation and economic performance.
• E) the real interest rate is always equal to 2 percent.

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