Which of the following claims is consistent with the views of mainstream economists?
A)If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will temporarily fall.
B)If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will temporarily rise.
C)If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will permanently fall.
D)If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will permanently rise.

Question

Quizplus · Accepted Answer

Mainstream economists generally subscribe to the Phillips curve, which suggests that there is an inverse relationship between inflation and unemployment in the short run. Therefore, increasing the rate of inflation from 3 percent to 6 percent would lead to a temporary fall in the rate of unemployment. However, this relationship may not hold in the long run.

Which of the Following Claims Is Consistent with the Views