A movement along the Phillips curve shows that the unemployment rate and inflation rate are
A)Inversely related to each other.
B)Directly related to each other.
C)Changing in response to shifts in aggregate supply.
D)Changing in response to supply-side policy.

Question

Quizplus · Accepted Answer

A movement along the Phillips curve shows that there is an inverse relationship between the unemployment rate and inflation rate. As the unemployment rate decreases, meaning more people are employed, there is usually an increase in demand for goods and services, leading to higher prices, or inflation. Conversely, when unemployment is high, there is less demand, leading to lower prices, or deflation.

A Movement Along the Phillips Curve Shows That the Unemployment