Once the Phillips curve has shifted up,the economy is ________ because ________.
A) better off; every unemployment rate becomes associated with a higher inflation rate
B) better off; every inflation rate becomes associated with a lower unemployment rate
C) worse off; every inflation rate becomes associated with a higher unemployment rate
D) worse off; every unemployment rate becomes associated with a lower inflation rate

Question

Quizplus · Accepted Answer

When the Phillips curve shifts up, it means that at any given level of unemployment, there will be a higher level of inflation. This indicates that the economy is worse off because policymakers now face a trade-off between higher inflation and higher unemployment rates. This makes it more difficult for the government to manage the economy effectively.

Once the Phillips Curve Has Shifted Up,the Economy Is ________