Which of the following is the most correct statement about the relationship between inflation and unemployment?
A)In the short run, falling inflation is associated with falling unemployment.
B)In the short run, falling inflation is associated with rising unemployment.
C)In the long run, falling inflation is associated with falling unemployment.
D)In the long run, falling inflation is associated with rising unemployment.

Question

Quizplus · Accepted Answer

In the short run, the relationship between inflation and unemployment is often described by the Phillips Curve, which suggests that falling inflation is associated with rising unemployment. This is because, in the short run, measures to reduce inflation often slow down economic activity, leading to higher unemployment.

Which of the Following Is the Most Correct Statement About