Which of the following is one way of expressing the meaning of the short-run Phillips curve?
A) The cost of reducing unemployment is higher inflation.
B) Nothing but good comes from reducing unemployment.
C) The cost of reducing inflation is lower unemployment.
D) Aggregate supply and aggregate demand will always be equal at the potential output level.

Question

Which of the following is one way of expressing the meaning of the short-run Phillips curve?  
A) The cost of reducing unemployment is higher inflation. 
B) Nothing but good comes from reducing unemployment. 
C) The cost of reducing inflation is lower unemployment. 
D) Aggregate supply and aggregate demand will always be equal at the potential output level.

Quizplus · Accepted Answer

The short-run Phillips curve illustrates a trade-off between inflation and unemployment, suggesting that reducing unemployment can lead to higher inflation, which is what choice A describes.

Which of the Following Is One Way of Expressing the Meaning