By the end of the 1970s, increases in both inflation and unemployment suggested _____
A) either that the Phillips curve had shifted outward or that it no longer described economic reality.
B) either that the Phillips curve had shifted inward or that it no longer described economic reality.
C) that the Phillips curve had stayed the same but that it no longer described economic reality.
D) that unemployment increased because aggregate demand fell.
E) that unemployment increased because aggregate supply fell.

Question

Quizplus · Accepted Answer

The increases in both inflation and unemployment contradicted the inverse relationship between the two predicted by the Phillips curve and suggested that the curve had shifted outward or that it no longer accurately described economic reality.

By the End of the 1970s, Increases in Both Inflation