The original Phillips curve illustrates ?
Correct answer: A. the trade-off between inflation and unemployment
- A. the trade-off between inflation and unemployment
- B. The trade-off between output and unemployment
- C. The positive relationship between output and unemployment
- D. The positive relationship between inflation and unemployment
Explanation
The original Phillips curve showed an inverse short-run relationship between wage or price inflation and unemployment. It therefore represented a trade-off between inflation and unemployment, not a positive relationship.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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