In the Friedman-Phelps analysis,when inflation is less than expected,unemployment is greater than the natural rate.

Question

Quizplus · Accepted Answer

According to the Friedman-Phelps model, when inflation is less than expected, firms will reduce production and employment, leading to a temporary increase in unemployment above the natural rate. This is known as the short-run tradeoff between inflation and unemployment. Therefore, option A is correct.

In the Friedman-Phelps Analysis,when Inflation Is Less Than Expected,unemployment Is