Which of the following statements is true of the U.S. experience with regards to the Phillips curve hypothesis?
I. Annual observations of inflation and unemployment from 1961 to 2008 seem consistent with a Phillips curve.
II. A Phillips curve relationship best fits observations of inflation and unemployment in the 1960s.
III. The Phillips curve relationship in the inflation and unemployment data began to disintegrate in the 1970s.
A) I only
B) II only
C) III only
D) II and III only

Question

Which of the following statements is true of the U.S. experience with regards to the Phillips curve hypothesis? 
I. Annual observations of inflation and unemployment from 1961 to 2008 seem consistent with a Phillips curve.
II. A Phillips curve relationship best fits observations of inflation and unemployment in the 1960s.
III. The Phillips curve relationship in the inflation and unemployment data began to disintegrate in the 1970s.
A) I only
B) II only
C) III only
D) II and III only

Quizplus · Accepted Answer

Annual observations of inflation and unemployment from 1961 to 2008 do show a Phillips curve relationship, but this relationship began to disintegrate in the 1970s. Therefore, statement I is partially true while statement III is true. Statement II implies that the Phillips curve relationship is only applicable to the 1960s, which is incorrect. Hence, the correct answer is D.

Which of the Following Statements Is True of the U