Question

3. explain how inflation unemployment trade off is not possible in the long run.

Answer 1

inflation unemployment trade is not possible in a long run because decrease in unemployment can lead to increase in inflation but only in the shirt run . in long run both r unrelatef

Answer 2

According to the Phillips curve, whenever inflation increased, unemployment decreased and vice-versa, also known as the unemployment-inflation trade-off.

This theory, however, was not accepted.

This is because, the negatively sloping Phillips curve could exist only in the short run, and not in the long run.

In the short turn, the curve may shift either upward or downward, since the relationship between unemployment and inflation is not stable.

However, in the long run, no trade-off exists.