If the unemployment rate rises and the inflation rate falls, while the natural unemployment rate and the expected inflation rate remain constant, then we are studying a movement along the
A)long- run aggregate supply curve.
B)aggregate demand curve.
C)Friedman curve.
D)short- run Phillips curve.
E)Phelps- Friedman curve.

Question

Quizplus · Accepted Answer

The relationship between unemployment and inflation is often illustrated by the Phillips curve. The short-run Phillips curve shows the inverse relationship between unemployment and inflation, holding constant the expected inflation rate and natural unemployment rate. Therefore, if the unemployment rate rises and the inflation rate falls while the expected inflation rate and natural unemployment rate remain constant, we are studying a movement along the short-run Phillips curve.

If the Unemployment Rate Rises and the Inflation Rate Falls