객관식
Which of the following is an example of Adam Smith's 'invisible hand' at work?
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0. Basic Principles of Economics
Introduction to Economics
객관식
In the late 1960s, what did Milton Friedman and Edmund Phelps predict about the relationship between inflation and unemployment?
A
That there is no long-run trade-off between inflation and unemployment.
B
That the Phillips Curve is a permanent and stable relationship.
C
That higher inflation always leads to lower unemployment in both the short and long run.
D
That inflation and unemployment are unrelated in any time frame.
검증된 단계별 안내1
Understand the historical context: Before Friedman and Phelps, the Phillips Curve suggested a stable, inverse relationship between inflation and unemployment, implying policymakers could choose a trade-off between the two.
Recognize Friedman and Phelps' key insight: They introduced the concept of the 'natural rate of unemployment' and argued that any trade-off between inflation and unemployment is only temporary.
Analyze the long-run perspective: According to their theory, in the long run, the economy returns to the natural rate of unemployment regardless of the inflation rate, meaning no permanent trade-off exists.
Understand the role of expectations: They emphasized that when people anticipate inflation, they adjust their behavior, which eliminates the short-run trade-off and leads to a vertical long-run Phillips Curve.
Summarize their prediction: The long-run Phillips Curve is vertical, indicating that inflation does not affect unemployment in the long run, so there is no long-run trade-off between inflation and unemployment.
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