Friedman and Phelps Argued That the Phillips Curve Is Not

Multiple Choice

Friedman and Phelps argued that the Phillips curve is not stable over time because

A) any kind of stabilization policy immediately affects nominal wages
B) any shift in aggregate demand will immediately also shift the Phillips curve
C) workers' expectations about price changes are only wrong temporarily
D) firms change wage rates for workers as soon as product prices change, so profits will not suffer
E) firms always immediately change their product prices in response to a change in money supply