The inverse relationship between inflation and unemployment is called
A)Okun's law
B)the Lucas curve
C)the Phillips curve
D)the replacement ratio
E)the sacrifice ratio

Question

Quizplus · Accepted Answer

The Phillips curve shows the negative relationship between inflation and unemployment, indicating that as unemployment decreases, inflation increases, and vice versa. Okun's law relates changes in unemployment to changes in GDP, while the Lucas curve shows the trade-off that policymakers must make between inflation and output in the short run. The replacement ratio measures the percentage of pre-retirement income that a retiree can replace with Social Security benefits, while the sacrifice ratio measures the reduction in output that must be endured to achieve a given reduction in inflation.

The Inverse Relationship Between Inflation and Unemployment Is Called