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Milton Friedman and Edmund Phelps argued in the late 1960s that in the long run the Phillips curve is a. downward-sloping, which implies that monetary and fiscal policies can influence the level of unemployment in the long run. b. downward-sloping, which implies that monetary and fiscal policies cannot influence the rate of inflation in the long run. c. vertical, which implies that monetary and fiscal policies cannot influence the level of unemployment in the long run. d. vertical, which implies that monetary and fiscal policies cannot influence the rate of inflation in the long run

Respuesta :

Parrain

Answer: c. vertical, which implies that monetary and fiscal policies cannot influence the level of unemployment in the long run.

Explanation:

The Phillip Curve is used to show that unemployment and inflation have an inverse relationship such that when inflation is increasing, unemployment is decreasing. Fiscal and monetary policies can be used to increase or decrease inflation and unemployment.

In the long run however, the Philips Curve is vertical which means that unemployment will no longer be affected by fiscal and monetary policies that aim to impart inflation because the economy will be at the natural rate of unemployment.

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