The position of the Phillips curve depends on each of the following except
A) the natural rate of unemployment.
B) the expected rate of inflation.
C) the actual rate of inflation.
D) whether there are any current supply shocks affecting inflation.

Question

Quizplus · Accepted Answer

The Phillips curve illustrates the inverse relationship between the rate of inflation and the rate of unemployment, holding constant expectations of inflation and other factors. The actual rate of inflation can be a result of the position of the Phillips curve but does not determine its position. Factors such as the natural rate of unemployment, expected inflation, and supply shocks can shift or shape the curve, but the actual rate of inflation is an outcome, not a determinant.

The Position of the Phillips Curve Depends on Each of the Following