Sia
Question
Microeconomics
Posted 9 months ago
Which of the following curves illustrates that there is a tradeoff between inflation and the unemployment rate?
Choose 1 answer:
(A) The aggregate demand (AD) curve
(B) The short-run Phillips curve (SRPC)
(C) The long-run Phillips curve (LRPC)
(D) The production possibilities curve (PPC)
(E) The demand for money
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Answer from Sia
Posted 9 months ago
Solution
a
The short-run Phillips curve (SRPC) illustrates the tradeoff between inflation and the unemployment rate
Answer
(B) The short-run Phillips curve (SRPC)
Key Concept
Short-run Phillips curve (SRPC)
Explanation
The short-run Phillips curve (SRPC) shows the inverse relationship between inflation and unemployment. When unemployment is low, inflation tends to be high, and vice versa. This tradeoff is not observed in the long run, as represented by the long-run Phillips curve (LRPC), which is vertical.
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