Question
Which curve shows the inverse relationship between unemployment and inflation rates ?
Answer: Option B
Answer: (b)
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases.
The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
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Answer: (b)
The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases.
The relationship, however, is not linear. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.
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