-The basic problem portrayed by the traditional Phillips curve is:
A)that an increase in aggregate demand sufficiently large to result in full employment may also cause inflation
B)that changes in the composition of total labour demand tend to cause deflation
C)that unemployment tends to increase at the same time that the general price level is rising
D)the possibility that automation will increase the level of structural unemployment
E)that changes in the composition of total labour demand tend to cause inflation

Question

-The basic problem portrayed by the traditional Phillips curve is:
A)that an increase in aggregate demand sufficiently large to result in full employment may also cause inflation 
B)that changes in the composition of total labour demand tend to cause deflation 
C)that unemployment tends to increase at the same time that the general price level is rising 
D)the possibility that automation will increase the level of structural unemployment 
E)that changes in the composition of total labour demand tend to cause inflation

Quizplus · Accepted Answer

The traditional Phillips curve illustrates a trade-off between inflation and unemployment, suggesting that policies aimed at reducing unemployment could lead to higher inflation, and vice versa.

-The Basic Problem Portrayed by the Traditional Phillips Curve Is