What can be concluded from the chart below (which shows inflation versus unemployment rates from 1948 to 2015)?
A) In the long run,the Phillips Curve is a robust model.
B) In the short run,unemployment is correlated with inflation.
C) In the long run,unemployment is correlated with inflation.
D) In the short run,unemployment is not always correlated with inflation.
E) In the long run,unemployment is not always correlated with inflation.

Question

What can be concluded from the chart below (which shows inflation versus unemployment rates from 1948 to 2015)? 
A) In the long run,the Phillips Curve is a robust model. 
B) In the short run,unemployment is correlated with inflation. 
C) In the long run,unemployment is correlated with inflation. 
D) In the short run,unemployment is not always correlated with inflation. 
E) In the long run,unemployment is not always correlated with inflation.

Quizplus · Accepted Answer

The chart shows that in the short run, there is a negative correlation between unemployment and inflation, which is consistent with the Phillips Curve model. However, in the long run, there is no consistent relationship between unemployment and inflation. Therefore, the best choice is E, which states that in the long run, unemployment is not always correlated with inflation.

What Can Be Concluded from the Chart Below (Which Shows