Consider Australian data for inflation and unemployment rates for the last five decades. Which of the following statements correctly describes the relationship between the two variables?
A)Several different short- run Phillips curves representing different natural unemployment rates and different expected inflation rates existed.
B)There is a positive relationship.
C)The natural unemployment rate did not change but the expected inflation rate did change over these years.
D)None of the above answers is correct.

Question

Quizplus · Accepted Answer

The relationship between inflation and unemployment in Australia, like in many other countries, has been described by the Phillips curve, which suggests a trade-off between inflation and unemployment in the short run. Over the decades, different short-run Phillips curves have been observed due to changes in expected inflation and natural unemployment rates.

Consider Australian Data for Inflation and Unemployment Rates for the Last