There is an inverse relationship between inflation and unemployment in the short run and this can be seen as an
A)example of the equality-efficiency trade-off.
B)example of the impact of comparative advantage.
C)example of macroeconomic policy choices.
D)example of an externality.
E)example of the use of abstraction in economic analysis.

Question

Quizplus · Accepted Answer

The inverse relationship between inflation and unemployment is a key concept in macroeconomic policy choices. It is often referred to as the Phillips curve and policymakers use this relationship to implement policies to stabilize the economy. For example, if inflation is high and unemployment is low, the central bank may increase interest rates to reduce inflation, which would increase unemployment in the short run, and vice versa. This is not an example of the other options listed.

There Is an Inverse Relationship Between Inflation and Unemployment in the Short