The Phillips curve indicates that there is a ?
Correct answer: D. negative relationship between the inflation rate and the unemployment rate
- A. negative relationship between the inflation rate and labor demand
- B. positive relationship between labor supply and the inflation rate
- C. positive relationship between the inflation rate and the employment the
- D. negative relationship between the inflation rate and the unemployment rate
Explanation
The Phillips curve traditionally shows an inverse relationship between inflation and unemployment: higher inflation is associated with lower unemployment in the short run. The relationship with employment is also indirectly positive, but option d states the standard formulation.
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