The Phillips curve shows the relationship between the
A) expected rate of inflation and the nominal interest rate.
B) nominal interest rate and the real interest rate.
C) real interest rate and the unemployment rate.
D) unemployment rate and the inflation rate.

Question

Quizplus · Accepted Answer

The Phillips curve shows the relationship between the unemployment rate and the inflation rate. As the unemployment rate decreases, there tends to be upward pressure on wages and prices, leading to higher inflation. Conversely, when unemployment increases, there tends to be downward pressure on wages and prices, leading to lower inflation. This relationship is often referred to as the trade-off between inflation and unemployment.

The Phillips Curve Shows the Relationship Between the