What does the initial Phillips curve relationship imply is the opportunity cost of reducing unemployment?
A) a higher inflation rate
B) a higher debt
C) a higher interest rate
D) a higher foreign exchange rate

Question

What does the initial Phillips curve relationship imply is the opportunity cost of reducing unemployment?  
A) a higher inflation rate 
B) a higher debt 
C) a higher interest rate 
D) a higher foreign exchange rate

Quizplus · Accepted Answer

According to the Phillips curve relationship, there is a trade-off between unemployment and inflation. Therefore, reducing unemployment implies higher inflation, which is the opportunity cost.

What Does the Initial Phillips Curve Relationship Imply Is the Opportunity