The Phillips curve shows
A)A historical (inverse)relationship between the rate of unemployment and the rate of inflation.
B)A historical (direct)relationship between the rate of unemployment and the rate of inflation.
C)A historical (inverse)relationship between the rate of unemployment and the rate of growth of real GDP.
D)A historical (direct)relationship between the rate of unemployment and the rate of growth of real GDP.

Question

Quizplus · Accepted Answer

The Phillips curve shows a historical inverse relationship between the rate of unemployment and the rate of inflation. As unemployment decreases, inflation tends to increase and vice versa. This relationship was first observed by economist A.W. Phillips in the mid-20th century and has been the subject of much analysis and debate in macroeconomic theory.

The Phillips Curve Shows