The short-run Phillips curve suggests that ____ rates of unemployment can be traded off for ____ rates of inflation.
A)lower; higher
B)greater; relatively high
C)less; relatively low
D)less; relatively high

Question

The short-run Phillips curve suggests that ____ rates of unemployment can be traded off for ____ rates of inflation.
A)​lower; higher
B)​greater; relatively high
C)​less; relatively low
D)​less; relatively high

Quizplus · Accepted Answer

The short-run Phillips curve suggests that lower rates of unemployment can be traded off for higher rates of inflation. This means that when the economy is operating below its potential output, reducing unemployment will cause inflation to rise in the short run. Therefore, policymakers face a trade-off between achieving low unemployment and low inflation.

The Short-Run Phillips Curve Suggests That ____ Rates of Unemployment