Stagﬂation's demise during the 1980s resulted in a
A) movement along the Phillips Curve toward less unemployment.
B) movement along the Phillips Curve toward more inﬂation.
C) shift in the Phillips Curve to the left.
D) shift in the Phillips Curve to the right.

Question

Quizplus · Accepted Answer

Stagflation, characterized by high inflation and high unemployment, challenged the traditional Phillips Curve, which posited an inverse relationship between inflation and unemployment. The demise of stagflation in the 1980s, often attributed to tighter monetary policies, would be represented by a shift in the Phillips Curve to the left, indicating a reduction in inflation at any given level of unemployment. This reflects an improvement in the trade-off between inflation and unemployment.

Stagﬂation's Demise During the 1980s Resulted in a