The problem portrayed by the short-run Phillips curve is that:
A)unemployment tends to increase when prices are rising.
B)changes in the composition of the labor force tend to increase the natural rate of unemployment.
C)inflation tends to increase when unemployment falls.
D)stagflation is unavoidable.

Question

Quizplus · Accepted Answer

The short-run Phillips curve illustrates a trade-off between inflation and unemployment, suggesting that as unemployment decreases, inflation tends to increase. This is because lower unemployment typically leads to higher demand for goods and services, which can push prices up.

The Problem Portrayed by the Short-Run Phillips Curve Is That