The Phillips curve is
A) a positive relationship in the long run between the rate of inflation and the rate of unemployment.
B) a negative relationship between the inflation rate and the unemployment rate, at least in the short run.
C) a positive relationship between the unemployment rate and the real Gross Domestic Product (GDP) level.
D) a positive relationship between price stability and constant, small-increment changes in the fiscal policy on the part of the Fed.

Question

Quizplus · Accepted Answer

The Phillips curve describes a negative relationship between the inflation rate and the unemployment rate, at least in the short run. As unemployment decreases, inflation is expected to rise, and vice versa. This relationship is often used in macroeconomic policy-making, as policymakers aim to balance these two variables.

The Phillips Curve Is