A sudden unexpected situation of stagflation (a situation of high inflation and high unemployment) is evidenced when the labor market Phillips curve:
A)becomes vertical.
B)has a slope of zero.
C)shifts inward.
D)shifts outward.

Question

Quizplus · Accepted Answer

The labor market Phillips curve shifts outward in a situation of stagflation, indicating that both inflation and unemployment rates are increasing simultaneously. This outward shift reflects the breakdown of the traditional inverse relationship between inflation and unemployment, suggesting that the economy is experiencing both high inflation and high unemployment at the same time.

A Sudden Unexpected Situation of Stagflation (A Situation of High