Question 30The short-run Phillips curve is based on the assumption that there is_____. no relationship between the inflation and unemployment a direct relationship between the inflation and unemployment an inverse relationship between the inflation and unemployment a trade-off between the output and unemployment

A. W. Phillips is credited with inventing the Phillips curve, which says that inflation and…

Answered: Question 30 The short-run Phillips…

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter27: The Philips Curve And Expetactions Theory

Section: Chapter Questions

Problem 1SQP

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Question 30

The short-run Phillips curve is based on the assumption that there is_____.

		no relationship between the inflation and unemployment
		a direct relationship between the inflation and unemployment
		an inverse relationship between the inflation and unemployment
		a trade-off between the output and unemployment

Definition Definition Relationship between the rate of unemployment and the rate of inflation that shows that the lower the initial rate of unemployment, the greater the rise in wage rate corresponding to a given rise in the rate of unemployment. The Phillips curve assumes that the ratio between prices and nominal wage rates is constant in the short run. Presented graphically, the Phillips curve shows an inverse relationship between the rate of unemployment and the rate of inflation.

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