The short-run Phillips curve shows
A) potential GDP.
B) a tradeoff between the unemployment rate and the inflation rate.
C) the natural unemployment rate.
D) the expected inflation rate.
E) a tradeoff between real GDP and unemployment.

Question

Quizplus · Accepted Answer

The short-run Phillips curve represents a tradeoff between the unemployment rate and the inflation rate. As unemployment decreases, inflation typically increases, and vice versa.

The Short-Run Phillips Curve Shows