According to the Phillips curve, other things being equal, inflation depends positively on:
A) expected inflation.
B) the unemployment rate.
C) the rate of technological change.
D) the quantities of capital and labor.

Question

Quizplus · Accepted Answer

The Phillips curve posits a negative relationship between the rate of unemployment and the rate of inflation, implying that as unemployment decreases, inflation increases. Expected inflation is a key component of this relationship, as it directly influences wage-setting behavior and price-setting behavior, thereby affecting actual inflation. Choices B, C, and D do not align with the Phillips curve's principles.

According to the Phillips Curve, Other Things Being Equal, Inflation