The Phillips curve illustrates the relationship between
A) aggregate demand and aggregate supply.
B) the interest rate and the money supply.
C) the rate of inflation and the rate of unemployment.
D) investment and the interest rate.
E) disposable income and saving.

Question

Quizplus · Accepted Answer

The Phillips curve shows the inverse relationship between the rate of inflation and the rate of unemployment in an economy. As unemployment decreases, demand for labor increases, leading to upward pressure on wages and prices. This relationship was first observed by economist A.W. Phillips in the 1950s and has since been a topic of much study and debate.

The Phillips Curve Illustrates the Relationship Between