The Phillips curve provides a theoretical link between
A)the liquidity preference and investment demand schedules.
B)labour markets and foreign-exchange markets.
C)the goods market and productivity.
D)the goods market and the labour market.
E)inflation and the demand for money.

Question

Quizplus · Accepted Answer

The Phillips curve shows the relationship between inflation (a measure of prices in the goods market) and unemployment (a measure of the labor market). As unemployment falls, the demand for labor increases and wages rise, which leads to higher production costs and ultimately higher prices (inflation).

The Phillips Curve Provides a Theoretical Link Between