Doubts about the natural and the existences of the Phillips curve arose in the 1970s when the economy experienced ?
Correct answer: C. simultaneously high rates of inflation and unemployment
- A. a high rate of inflation: along with a low rate of unemployment
- B. simultaneously low rates of inflation and unemployment
- C. simultaneously high rates of inflation and unemployment
- D. a high rate of unemployment along with a low rate of inflation
Explanation
The 1970s brought stagflation, the unusual combination of high inflation and high unemployment. This evidence challenged a simple stable inverse trade-off suggested by the Phillips curve.
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