The slope of the Phillips curve depends on
A) how sticky interest rates are.
B) how sticky the exchange rate is.
C) how sticky wages and prices are.
D) how sticky the inflation rate is.

Question

Quizplus · Accepted Answer

The slope of the Phillips curve depends on how sticky wages and prices are. The Phillips curve illustrates the inverse relationship between the rate of inflation and the rate of unemployment, suggesting that lower unemployment comes with higher inflation, and vice versa. The "stickiness" or flexibility of wages and prices affects how quickly the economy can move along the curve, as more rigid wages and prices can slow down adjustments to changes in demand or supply, impacting inflation and unemployment rates.

The Slope of the Phillips Curve Depends on