Which one of the following represents one of the basic problems illustrated by the Phillips curve?
A)That the inflation rate tends to decrease as the economy moves closer to full employment
B)That the inflation rate tends to increase as the economy moves closer to full employment
C)That the unemployment rate tends to decrease as the economy moves toward price stability
D)That high levels of unemployment tend to accompany high rates of inflation

Question

Quizplus · Accepted Answer

The Phillips curve represents the trade-off between inflation and unemployment. Option B illustrates the basic problem that as the economy moves closer to full employment, there tends to be an increase in the inflation rate.

Which One of the Following Represents One of the Basic