Stagflation's demise during the 1980s resulted in a:
A) Movement along the Phillips Curve toward less unemployment
B) Movement along the Phillips Curve toward more inflation
C) Shift in the Phillips Curve to the left
D) Shift in the Phillips Curve to the right

Question

Quizplus · Accepted Answer

Stagflation refers to a situation where there is both high inflation and high unemployment. During the 1980s, the US experienced a significant decrease in inflation and unemployment rates, which is known as the demise of stagflation. This was due to a shift in the Phillips Curve, which represents the inverse relationship between inflation and unemployment. The shift to the left in the Phillips Curve implies that lower levels of unemployment can be achieved with lower levels of inflation. Therefore, the correct answer is C, a shift in the Phillips Curve to the left.

Stagflation's Demise During the 1980s Resulted in A