The mainstream view among economists is that
A)society faces a tradeoff between unemployment and inflation,but only in the short run.
B)society faces a tradeoff between unemployment and inflation,but only in the long run.
C)society faces a tradeoff between unemployment and inflation,both in the short run and in the long run.
D)no tradeoff exists between unemployment and inflation,either in the short run or in the long run.

Question

Quizplus · Accepted Answer

The mainstream view among economists is that in the short run, there is a tradeoff between unemployment and inflation. This is because when unemployment is high, there is less demand for goods and services, which means that firms have less pricing power, leading to lower inflation. Conversely, when unemployment is low, firms have more pricing power, leading to higher inflation. However, in the long run, this tradeoff disappears because wages and prices adjust to changes in aggregate demand, bringing the economy back to the natural rate of unemployment regardless of the inflation rate.

The Mainstream View Among Economists Is That