For a number of years Canada and many European countries have had higher average unemployment rates than the United States.The Phillips curve suggests that these countries
A)have higher average inflation rates than the United States.
B)have long-run Phillips curves to the right of the United States'.
C)may have less generous unemployment compensation or lower minimum wages.
D)All of the above are consistent with the evidence on unemployment rates.

Question

Quizplus · Accepted Answer

The Phillips curve suggests a trade-off between inflation and unemployment. If Canada and European countries have higher unemployment rates, it implies their long-run Phillips curves are to the right of the United States', indicating a higher natural rate of unemployment.

For a Number of Years Canada and Many European Countries