In the long run,the classical dichotomy holds,
A)money is not neutral.
B)there is constant tension between inflation and unemployment.
C)the inflation and unemployment rates are zero.
D)steady-state growth is a constant 2 percent.
E)there is no trade-off between inflation and unemployment.

Question

Quizplus · Accepted Answer

The classical dichotomy states that in the long run, the real economy (output, employment, production) is separate from the monetary economy (inflation, money supply, price level). Therefore, there is no trade-off between inflation and unemployment, as they operate in separate spheres. So, choice E is the best option.

In the Long Run,the Classical Dichotomy Holds