The short-run Phillips curve portrays a(n) _____
A) direct relationship between total employment and the inflation rate.
B) inverse relationship between inflation and total employment.
C) direct relationship between the unemployment rate and the inflation rate.
D) inverse relationship between the inflation rate and the unemployment rate.
E) inverse relationship between the price level and the unemployment rate.

Question

Quizplus · Accepted Answer

The short-run Phillips curve depicts an inverse relationship between the inflation rate and the unemployment rate, as shown by empirical evidence in the 1950s and 1960s. This suggests that policymakers can choose between higher inflation and lower unemployment or vice versa in the short run, but there is a trade-off between them.

The Short-Run Phillips Curve Portrays A(n) _____