The short-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when ________ remain(s) constant.
A) monetary policy
B) the natural unemployment rate and the expected inflation rate
C) fiscal policy
D) interest rates
E) aggregate demand

Question

Quizplus · Accepted Answer

The short-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the natural unemployment rate and the expected inflation rate remain constant. Factors such as monetary policy, fiscal policy, interest rates, and aggregate demand can impact inflation and unemployment in the short run, but the short-run Phillips curve assumes that these factors remain unchanged.

The Short-Run Phillips Curve Shows the Relationship Between the Inflation