The negative relationship between the inflation rate and the unemployment rate is known as the:

Question

Quizplus · Accepted Answer

The negative relationship between the inflation rate and the unemployment rate is captured by the short-run Phillips curve, which shows that when unemployment is low (i.e., the economy is near full employment), inflation tends to be higher, and vice versa. This relationship holds in the short-run, as over the long-run, inflation and unemployment are not directly related. The short-run Phillips curve is a key concept in macroeconomics and helps to explain the trade-off between unemployment and inflation that policy-makers face.

The Negative Relationship Between the Inflation Rate and the Unemployment