The Phillips curve shows the trade-off between _____ and _____?
Correct answer: B. the inflation rate, the unemployment rate
- A. the inflation rate, interest rates
- B. the inflation rate, the unemployment rate
- C. interest rates, output
- D. output, employment
Explanation
The Phillips curve describes an inverse short-run relationship between inflation and unemployment: lower unemployment is generally associated with higher inflationary pressure. Interest rates and output are not the two variables directly shown by the standard curve.
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