Which of the following explains why Monetarist economists criticise the traditional Phillips Curve as a reliable long-run tool for macroeconomic policy-making?
Workers and firms adapt their expectations of inflation, shifting the short-run trade-off over time.
Consumers suffer from permanent money illusion, which keeps actual unemployment permanently below the natural rate.
The model incorrectly assumes that real wages rather than nominal wages determine labour supply.
There is a permanent, stable inverse relationship between inflation and unemployment at all levels of output.