A reverse Phillips Curve would consist of a
A)positive relationship between deviations from trend in the level of prices and the level of aggregate economic activity.
B)relationship between lagging and leading indicators.
C)negative relationship between deviations from trend in real and nominal interest rates.
D)negative relationship between deviations from trend in the level of prices and the level of aggregate economic activity.
E)positive relationship between deviations from trend in real and nominal interest rates.

Question

Quizplus · Accepted Answer

A reverse Phillips Curve shows a negative relationship between deviations from trend in the level of prices and the level of aggregate economic activity. This means that inflation would not be expected to rise during periods of high economic growth and low unemployment, as is traditionally seen in a Phillips Curve. Instead, inflation would be expected to decrease during these times, as a reverse relationship exists between inflation and economic activity.

A Reverse Phillips Curve Would Consist of a