A basis for the slope of the short-run Phillips curve is that when unemployment is high there are
A)downward pressures on prices and wages.
B)downward pressures on prices and upward pressures on wages.
C)upward pressures on prices and downward pressures on wages.
D)upward pressures on prices and wages.

Question

Quizplus · Accepted Answer

The short-run Phillips curve suggests that there is an inverse relationship between unemployment and inflation. When unemployment is high, it indicates that the economy is not operating at full capacity, leading to downward pressures on prices and wages as demand for goods and services decreases.

A Basis for the Slope of the Short-Run Phillips Curve