The Phillips curve implies that the economy faces a:

Question

Quizplus · Accepted Answer

The Phillips curve represents a short-run trade-off between inflation and unemployment. It suggests that when unemployment is low, inflation tends to be high, and when unemployment is high, inflation tends to be low. However, this trade-off is only applicable in the short run, as in the long run, any reduction in unemployment results in an increase in inflation without changing output or wages. Therefore, there is no long-run trade-off between inflation and unemployment.

The Phillips Curve Implies That the Economy Faces A