Refer to the following figure when answering the following questions.
Figure 9.5: U.S. Inflation 1960-2015 (Source: Bureau of Labor Statistics)
-Consider Figure 9.5, which shows the annual inflation rate. According to the Phillips curve, the period from about 2001 to 2002 was a period of:
A) a booming economy.
B) a slumping economy.
C) stagnation.
D) None of these answers is correct.
E) Not enough information is given.

Question

Refer to the following figure when answering the following questions.
Figure 9.5: U.S. Inflation 1960-2015  (Source: Bureau of Labor Statistics)
-Consider Figure 9.5, which shows the annual inflation rate. According to the Phillips curve, the period from about 2001 to 2002 was a period of:
A) a booming economy. 
B) a slumping economy. 
C) stagnation. 
D) None of these answers is correct. 
E) Not enough information is given.

Quizplus · Accepted Answer

According to the Phillips curve, there is an inverse relationship between inflation and unemployment rate. Looking at Figure 9.5, we can see that the inflation rate was low in 2001 and began to decline further in 2002, indicating a period of low economic activity and possibly a slumping or recessionary economy. Therefore, choice B, a slumping economy, is the best answer.

Refer to the Following Figure When Answering the Following Questions