Which of the following is one implication of the Phillips curve analysis?
A) Unemployment rates below the natural rate are possible only in the long run.
B) Unemployment rates below the natural rate lead to falling rates of inflation in the long run.
C) Unemployment rates below the natural rate may be achieved only with rising inflation rates.
D) The natural rate of unemployment is strictly a short-run phenomenon.

Question

Which of the following is one implication of the Phillips curve analysis?  
A) Unemployment rates below the natural rate are possible only in the long run. 
B) Unemployment rates below the natural rate lead to falling rates of inflation in the long run. 
C) Unemployment rates below the natural rate may be achieved only with rising inflation rates. 
D) The natural rate of unemployment is strictly a short-run phenomenon.

Quizplus · Accepted Answer

The Phillips curve analysis suggests that there is a trade-off between inflation and unemployment in the short run, implying that lower unemployment rates below the natural rate can be achieved, but at the cost of higher inflation rates.

Which of the Following Is One Implication of the Phillips