The traditional Phillips Curve shows the
A) direct correlation between the rate of inﬂation and the unemployment rate.
B) inverse correlation between the rate of inﬂation and the rate of unemployment.
C) direct correlation between the short-run and long-run aggregate supply.
D) inverse correlation between the short-run and long-run aggregate supply.

Question

Quizplus · Accepted Answer

The traditional Phillips Curve shows an inverse correlation between the rate of inflation and the rate of unemployment. This means that as the rate of inflation goes up, the rate of unemployment tends to go down, and vice versa. However, this relationship has changed over time and is not as clear-cut as originally proposed.

The Traditional Phillips Curve Shows the