Phillips loops are likely to become 'taller' if the government pursues stronger
demand- management policy that switches more violently and frequently between the objectives of reducing unemployment and reducing inflation.

Question

Phillips loops are likely to become 'taller' if the government pursues stronger
 demand- management policy that switches more violently and frequently between the objectives of reducing unemployment and reducing inflation.

Quizplus · Accepted Answer

Phillips loops describe the trade-off between inflation and unemployment in an economy. A stronger demand-management policy that frequently alternates between focusing on reducing unemployment and reducing inflation can lead to more pronounced cycles of inflation and unemployment, thus making the Phillips loops 'taller' as the economy moves more dramatically between these two states.

Phillips Loops Are Likely to Become 'Taller' If the Government