The Phillips curve tradeoff implies

Question

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The Phillips curve tradeoff implies that there is a negative relationship between unemployment and inflation in the short run, and that policymakers can choose their desired level of unemployment at the cost of a corresponding level of inflation. Therefore, if the curve is stable, society must accept increases in inflation to achieve decreases in unemployment. Option B is incorrect because an unstable curve would imply that the relationship between unemployment and inflation is unpredictable and may not hold true. Option C is incorrect because a stable curve does not give society the option to increase both inflation and unemployment simultaneously. Option D is incorrect because falling unemployment when inflation falls is a desirable outcome and does not require society to accept any cost.

The Phillips Curve Tradeoff Implies