Answer to Question #262116 in Macroeconomics for manuewrz

Question

Although Friedman and Keynesians agree on the slopes of the Philips Curve in the short run and the long run, they disagree on using activist aggregate demand policies to hold unemployment below its long run average, even in the short run. Briefly discuss. (12 marks)

Answer 1

There is no trade-off between unemployment and inflation in the long run. Inflation will still rise, but there will be no change in unemployment