Which statement is consistent with the tenth principle of economics?
A) If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily fall.
B) If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily rise.
C) If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will permanently fall.
D) If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will permanently rise.

Question

Quizplus · Accepted Answer

The tenth principle of economics, which relates to the Phillips Curve, suggests that there is a short-term trade-off between inflation and unemployment. Increasing inflation can temporarily lower unemployment as prices rise faster than wages, encouraging employers to hire more workers.

Which Statement Is Consistent with the Tenth Principle of Economics