Analysis of the Phillips curve reveals that a _____ in unemployment, like that of the early 1980s, is needed to break the cycle of inflationary expectations.
A) permanent increase
B) permanent decrease
C) temporary increase
D) temporary decrease

Question

Quizplus · Accepted Answer

The Phillips curve suggests that a temporary increase in unemployment can help break the cycle of inflationary expectations by cooling down the economy and reducing pressure on prices, which was a strategy used in the early 1980s.

Analysis of the Phillips Curve Reveals That a _____ in Unemployment