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

Question

Quizplus · Accepted Answer

A Phillips curve shows the inverse relationship between the unemployment rate and inflation. As unemployment decreases, inflation tends to increase and vice versa. The curve is based on the idea that there is a short-term tradeoff between unemployment and inflation, with higher inflation leading to lower unemployment in the short run, but higher unemployment leading to lower inflation in the long run.

A Phillips Curve Measures the Relationship Between