A Phillips curve measures the relationship between
A) the unemployment rate and inflation.
B) unemployment and GDP.
C) inflation and GDP.
D) the level of money wage rates and GDP.

Question

Quizplus · Accepted Answer

A Phillips curve measures the relationship between the unemployment rate and inflation. It shows the inverse relationship between the two variables, suggesting that as unemployment decreases, inflation increases and vice versa. The Phillips curve is a useful tool for analyzing the trade-off between inflation and unemployment in the short run.

A Phillips Curve Measures the Relationship Between