Experience with the Phillips curve since the 1970s has shown that the:
A) curve can be used as a reliable model to guide public policy.
B) relationship between the inflation rate and the unemployment rate moves in a clockwise direction.
C) curve is not stable.
D) inflation rate and the unemployment rate are equal.

Question

Quizplus · Accepted Answer

The experience with the Phillips curve since the 1970s has demonstrated that it is not a stable relationship. In the 1970s, the United States experienced a phenomenon called stagflation, which is a high inflation rate combined with high unemployment, contrary to what the Phillips curve predicted. This showed that the Phillips curve was not an accurate or reliable model for guiding public policy.

Experience with the Phillips Curve Since the 1970s Has Shown