The Phillips curve shows a ______ relationship between inflation and unemployment, and the short-run aggregate supply curve shows a ______ relationship between the price level and output.
A) positive; positive
B) positive; negative
C) negative; negative
D) negative; positive

Question

Quizplus · Accepted Answer

The Phillips curve illustrates a negative relationship between inflation and unemployment, indicating that higher inflation is associated with lower unemployment and vice versa. The short-run aggregate supply curve shows a positive relationship between the price level and output, meaning that as the price level increases, the quantity of goods and services supplied also increases.

The Phillips Curve Shows a ______ Relationship Between Inflation and Unemployment