The short-run Phillips curve shows ________ between the unemployment rate and the inflation rate and the long-run Phillips curve shows ________ between the unemployment rate and the inflation rate.
A) a negative relationship; no relationship
B) a negative relationship; a positive relationship
C) no relationship; no relationship
D) no relationship; a negative relationship
E) a positive relationship; a negative relationship

Question

Quizplus · Accepted Answer

The short-run Phillips curve illustrates a negative relationship between unemployment and inflation, suggesting that lower unemployment can lead to higher inflation. In the long run, the Phillips curve is vertical, indicating no trade-off between unemployment and inflation, as the economy adjusts to the natural rate of unemployment.

The Short-Run Phillips Curve Shows ________ Between the Unemployment Rate