Select the answer that correctly completes this sentence: "The Phillips curve shows the relationship between:
A)the rate of change in the price level and the unemployment rate."
B)the rate of change in the price level and the level of real output produced."
C)the unemployment rate and real income."
D)the price level and the level of unemployment."

Question

Quizplus · Accepted Answer

The Phillips curve illustrates the inverse relationship between the unemployment rate and the rate of change in the price level, usually represented by inflation. When the unemployment rate is low, there is upward pressure on wages, which leads to an increase in prices. Conversely, during periods of high unemployment, workers have less bargaining power, resulting in lower wages and lower inflation. Therefore, the correct answer is A.

Select the Answer That Correctly Completes This Sentence: "The Phillips