The tradeoff between inflation and the unemployment rate comes from expected inflation.

Question

Quizplus · Accepted Answer

The tradeoff between inflation and unemployment, often represented by the Phillips Curve, primarily arises from short-term dynamics where lower unemployment can lead to higher inflation due to increased demand for goods and higher wages. Expected inflation can influence this relationship but is not the sole or primary cause of the tradeoff.

The Tradeoff Between Inflation and the Unemployment Rate Comes from Expected