Answer to Question #246921 in Macroeconomics for Mana

Question

A Phillips curve shows that in the:

A. long run there is a trade-off between unemployment and inflation.

B. long run there is a trade-off between GDP and prices.

C. short run there is a trade-off between unemployment and inflation.

D. short run there is a trade-off between unemployment and wages.

Answer 1

the correct option is (C) short run there is a trade off between unemployment and inflation.

Phillips curve shows an inverse relationship between the rate of inflation and the rate of unemployment.