Using the equation for the Phillips curve, suppose that nominal wages increased by 5% and the inflation rate was 3%. What was the rate of increase in labor productivity?

Question

Quizplus · Accepted Answer

The Phillips curve describes the relationship between inflation and unemployment, but in the context of this question, we're looking at the relationship between nominal wage increases, inflation, and labor productivity. The rate of increase in labor productivity can be found by subtracting the inflation rate from the nominal wage increase rate. Therefore, 5% - 3% = 2%.

Using the Equation for the Phillips Curve, Suppose That Nominal