What us Phillips curve
5 answers
The Phillips curve is a graphical representation of the inverse relationship between inflation and unemployment. It suggests that as unemployment decreases, inflation tends to increase, and vice versa. The curve was first proposed by economist A.W. Phillips in the 1950s based on his research on historical data from the UK. The Phillips curve has been a key concept in macroeconomics and is often used by policymakers to help guide decisions related to monetary policy and economic stability.
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The Phillip's curve illustrates that the opportunity cost of increasing inflation in an economy is
A. Deterioration in the terms of trade
B. Balance of payment deficit
C. Exchange rate depreciation
D. Increasing in the level of employment
A. Deterioration in the terms of trade
B. Balance of payment deficit
C. Exchange rate depreciation
D. Increasing in the level of employment
The correct answer is:
D. Increasing in the level of employment
The Phillips curve illustrates the trade-off between inflation and unemployment. When inflation decreases, unemployment tends to increase, and when inflation increases, unemployment tends to decrease. This trade-off suggests that in order to reduce unemployment, policymakers may need to accept higher levels of inflation, and vice versa.
D. Increasing in the level of employment
The Phillips curve illustrates the trade-off between inflation and unemployment. When inflation decreases, unemployment tends to increase, and when inflation increases, unemployment tends to decrease. This trade-off suggests that in order to reduce unemployment, policymakers may need to accept higher levels of inflation, and vice versa.