The following Phillips curve of would be consistent with the _____ model(s). $$\dot { P } = .03 - .25 ( u - .04 )$$
A)Keynesian.
B)monetarist.
C)monetarist and classical.
D)classical.
E)None of the above

Question

Quizplus · Accepted Answer

The Phillips curve, which shows an inverse relationship between unemployment and inflation, is consistent with Keynesian economics. Keynesians believe that policies can be used to influence demand, which in turn affects inflation and unemployment. This equation suggests that as unemployment decreases (u < .04), inflation ($\dot { P }$) increases, which aligns with Keynesian thought.

The Following Phillips Curve of Would Be Consistent with the _____