The Phillips curve is a graph showing the relationship between ?
Correct answer: B. the inflation rate and the unemployment rate
- A. the price level and the unemployment rate
- B. the inflation rate and the unemployment rate
- C. the level of aggregate output and the price level
- D. the inflation rate and the level of aggregate demand
Explanation
The Phillips curve plots inflation, usually the rate of change in prices, against unemployment. It does not directly plot the overall price level or aggregate demand.
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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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