The Phillips Curve shows a tradeoff between
A)the rate of economic growth and the rate of inflation.
B)the rate of inflation and the rate of unemployment.
C)the rate of economic growth and the rate of unemployment.
D)the rate of growth in the labor supply and the rate of growth in wages.

Question

Quizplus · Accepted Answer

The Phillips Curve shows the inverse relationship between the unemployment rate and the inflation rate. As unemployment decreases, inflation tends to increase, and vice versa. This relationship implies a tradeoff between achieving low unemployment versus low inflation. The Phillips Curve is one of the important tools used in macroeconomic analysis and policy-making.

The Phillips Curve Shows a Tradeoff Between