A Phillips curve represents the observed positive correlation between the inflation rate and some measure of aggregate economic activity, usually represented by the unemployment rate. The curve is named after economist A.W. Phillips who first observed this relationship in the 1950s. The other options are not accurate definitions of the Phillips curve.

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A Phillips Curve Is

Question 18

Multiple Choice

A Phillips curve is

A) the correlation between money growth and the inflation rate.
B) the negative correlation between the unemployment rate and the vacancy rate.
C) the positive observed correlation between the inflation rate and the nominal interest rate.
D) an observed positive correlation between the inflation rate and some measure of aggregate economic activity.

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