The Phillips phase of the inflation-unemployment cycle occurs when both inflation and unemployment increase.

Question

Quizplus · Accepted Answer

The Phillips curve shows an inverse relationship between inflation and unemployment. The Phillips phase occurs when inflation and unemployment move in opposite directions - either inflation is increasing and unemployment is decreasing (upward shift) or inflation is decreasing and unemployment is increasing (downward shift). Therefore, the statement that both inflation and unemployment increase during the Phillips phase is false.

The Phillips Phase of the Inflation-Unemployment Cycle Occurs When Both