Multiple Choice
One reason that the Phillips curve "broke down" is that it
A) is unable to explain short-run movements in inflation and unemployment, but does a better job of explaining long-run movements.
B) assumes a quick-acting self-correcting mechanism, and the economy has a very slow self-correcting mechanism.
C) is a statistical relationship, and some of the points are not sustainable in the long run.
D) cannot explain demand-side inflation, and it collapsed when demand-side inflation was predominant in the 1970s.
Correct Answer:
Verified
Correct Answer:
Verified
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