According to the Phillips curve, policymakers would reduce inflation but raise unemployment if they
A)decreased the money supply.
B)increased government expenditures.
C)decreased taxes.
D)increased the money supply.

Question

Quizplus · Accepted Answer

The Phillips curve suggests an inverse relationship between inflation and unemployment. Decreasing the money supply would likely reduce inflation because there is less money chasing the same amount of goods and services, but it could also lead to higher unemployment as a result of reduced spending and investment.

According to the Phillips Curve, Policymakers Would Reduce Inflation but Raise