In Australia, when both the unemployment rate and the inflation rate rose during the 1970s and 1980s, it is reasonable to conclude that
A)only the short- run Phillips curve shifted.
B)both the short- run and long- run Phillips curves shifted rightward.
C)both the short- run and long- run Phillips curves shifted leftward.
D)only the long- run Phillips curve shifted.

Question

Quizplus · Accepted Answer

During the 1970s and 1980s, Australia experienced stagflation, where both inflation and unemployment rose. This suggests that both the short-run and long-run Phillips curves shifted rightward, indicating a breakdown in the inverse relationship between inflation and unemployment.

In Australia, When Both the Unemployment Rate and the Inflation