According to the Phillips curve, if current output equals potential output:
A) unemployment is zero.
B) inflation fluctuates a lot.
C) inflation is steady.
D) unemployment is negative.
E) the economy is booming.

Question

Quizplus · Accepted Answer

According to the Phillips curve, if current output equals potential output, inflation is steady. This is because at this point, there is no excess demand or supply in the economy, which means that there is no pressure on prices to increase or decrease. Therefore, inflation is likely to remain stable.

According to the Phillips Curve, If Current Output Equals Potential