Policy-makers in the 1960s believed that there was a structural relationship between unemployment and inflation. This meant that the cost of lower unemployment was a:
A)permanently higher inflation rate.
B)permanently lower inflation rate.
C)temporarily higher inflation rate.
D)temporarily lower inflation rate.

Question

Quizplus · Accepted Answer

Policy-makers in the 1960s, influenced by the Phillips Curve, believed that reducing unemployment would lead to a permanently higher inflation rate, as more money chasing fewer goods would push prices up.

Policy-Makers in the 1960s Believed That There Was a Structural