The slope of the short-run Phillips curve is consistent with the
A) long-run tradeoff between the unemployment rate and inflation.
B) long-run tradeoff between inflation and GDP.
C) short-run tradeoff between the money supply and interest rates.
D) short-run tradeoff between business productivity and wage contracts.
E) short-run tradeoff between the unemployment rate and inflation.

Question

Quizplus · Accepted Answer

The slope of the short-run Phillips curve reflects the inverse relationship between the unemployment rate and inflation in the short run, as firms adjust wages and prices in response to changes in aggregate demand. Therefore, the best choice is E, which describes the short-run tradeoff between the unemployment rate and inflation. The other options are not relevant to the Phillips curve relationship.

The Slope of the Short-Run Phillips Curve Is Consistent with the