Macro economic misery diminished during the first Reagan administration,which means that the Phillips curve
A)Maintained its position despite important changes in the composition of the labor force.
B)Shifted to the left,thereby implying an easing of the trade-off between inflation and unemployment.
C)Shifted to the right,thereby implying that stagflation had become a more acute problem than before.

Question

Quizplus · Accepted Answer

The Phillips curve shows the inverse relationship between inflation and unemployment. When the curve shifts to the left, it means that unemployment decreases at the cost of higher inflation, and vice versa. During the first Reagan administration, macroeconomic misery diminished, which implies that both inflation and unemployment decreased. This suggests that the Phillips curve shifted to the left, indicating an easing of the trade-off between inflation and unemployment.

Macro Economic Misery Diminished During the First Reagan Administration,which Means