The short-run Phillips curve is the relation between inflation and unemployment that holds for a given natural rate of unemployment and a
A)given rate of inflation.
B)given expected rate of inflation.
C)given level of unemployment.
D)given expected level of unemployment.

Question

Quizplus · Accepted Answer

The short-run Phillips curve reflects the relationship between inflation and unemployment in the short run, and it is influenced by the expected rate of inflation. Therefore, the correct choice is B, given the expected rate of inflation. The natural rate of unemployment only determines the level of unemployment consistent with non-accelerating inflation, and it is not constant in the short run. The same applies to the level of unemployment or the expected level of unemployment, which are not relevant for the short-run Phillips curve.

The Short-Run Phillips Curve Is the Relation Between Inflation and Unemployment