The relationship between inflation and unemployment is represented by:
Correct answer: B. Phillips curve
- A. Okun's law
- B. Phillips curve
- C. Say's law
- D. U-shape curve
Explanation
The Phillips curve shows the short-run inverse relationship between inflation and unemployment: stronger demand may reduce unemployment but increase inflation. Okun’s law instead relates unemployment to output growth.
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About Macroeconomics
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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