In responding to the Phillips curve hypothesis,Friedman argued that the Fed can peg the
A)unemployment rate.
B)inflation rate.
C)growth rate of real national income.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Friedman argued that the Fed can peg the inflation rate, but not the unemployment rate or the growth rate of real national income, as the Phillips curve hypothesis suggested. He believed that attempting to rely on the Phillips curve to lower unemployment would lead to accelerating inflation, as workers and employers would continually adjust their expectations to higher inflation rates. Therefore, the best choice is B.

In Responding to the Phillips Curve Hypothesis,Friedman Argued That the Fed