What does the Phillips curve show?
A) The output gap for an economy over a number of years.
B) The relationship between output and interest rates.
C) The relationship between unemployment and in?ation.
D) The growth rate of potential GDP over a period of time.

Question

Quizplus · Accepted Answer

The Phillips curve illustrates the inverse relationship between the rate of inflation and the unemployment rate. Essentially, it suggests that lower unemployment in an economy is associated with higher rates of inflation, and vice versa.

What Does the Phillips Curve Show