The Phillips curve depicts the relationship between:
A) money supply and interest rate.
B) inflation and unemployment.
C) output and the price level.
D) aggregate demand and aggregate expenditures.

Question

Quizplus · Accepted Answer

The Phillips curve shows the inverse relationship between inflation (or price level) and unemployment. As unemployment decreases, there is typically upward pressure on wages and prices which leads to higher inflation. Conversely, higher levels of unemployment typically lead to lower inflation as workers have less bargaining power and there is less upward pressure on wages and prices.

The Phillips Curve Depicts the Relationship Between