If the Bank of Canada attempts to reach and maintain very low rates of unemployment, we would expect the rate of inflation to rise.

Question

Quizplus · Accepted Answer

The Phillips Curve suggests that there is an inverse relationship between unemployment and inflation. Therefore, if the Bank of Canada attempts to reach and maintain very low rates of unemployment, this could lead to an increase in inflationary pressure as there is likely to be increased demand for goods and services, which could push up prices.

If the Bank of Canada Attempts to Reach and Maintain