Suppose that the economy experiences an increase in the inflation rate at the same time that the unemployment rate decreases. This situation indicates a:
A)shift in the Phillips curve.
B)movement along a vertical Phillips curve.
C)movement along a horizontal Phillips curve.
D)movement along a positively-sloped Phillips curve.
E)movement along a negatively-sloped Phillips curve.

Question

Quizplus · Accepted Answer

The Phillips curve suggests an inverse relationship between inflation and unemployment. A decrease in unemployment with an increase in inflation indicates movement along a negatively-sloped Phillips curve.

Suppose That the Economy Experiences an Increase in the Inflation