The short- run Phillips curve shows the tradeoff between , holding the expected inflation rate and the natural unemployment rate constant.
A) the price level and unemployment
B) inflation and unemployment
C) the price level and real GDP
D) inflation and employment

Question

Quizplus · Accepted Answer

The short-run Phillips curve shows the tradeoff between inflation and unemployment. It holds the expected inflation rate and the natural unemployment rate constant. As inflation decreases, unemployment tends to increase and vice versa in the short run. Therefore, choice B (inflation and unemployment) is the best answer.

The Short- Run Phillips Curve Shows the Tradeoff Between