The negative relationship between unemployment and inflation is known as the
A)aggregate supply curve.
B)aggregate demand curve.
C)Phillips curve.
D)efficiency wage line.

Question

Quizplus · Accepted Answer

The negative relationship between unemployment and inflation is known as the Phillips curve. As unemployment decreases, inflation tends to increase and vice versa. This relationship was first observed by A.W. Phillips in the 1950s and has been an important concept in macroeconomics ever since. The aggregate supply curve (A) represents the total amount of goods and services that firms are willing and able to produce at different price levels, while the aggregate demand curve (B) represents the total amount of goods and services that households, businesses, and governments are willing and able to buy at different price levels. The efficiency wage line (D) represents the level of wages that maximizes worker productivity and firm profits.

The Negative Relationship Between Unemployment and Inflation Is Known as the