Along a short-run Phillips curve, the
A) short-run cost of higher inflation is a higher real interest rate.
B) long-run cost of lower inflation is higher unemployment.
C) short-run cost of lower inflation is higher interest rates.
D) short-run cost of lower unemployment is higher inflation.
E) short-run benefit of lower unemployment is lower inflation.

Question

Quizplus · Accepted Answer

The short-run Phillips curve illustrates a trade-off between inflation and unemployment, suggesting that reducing unemployment in the short term can lead to higher inflation.

Along a Short-Run Phillips Curve, the