The short-run Phillips curve presents a tradeoff because a
A)lower unemployment rate can be achieved at the cost of a higher inflation rate.
B)lower unemployment rate can be achieved at the cost of a lower inflation rate.
C)higher unemployment rate can be achieved at the cost of a higher inflation rate.
D)higher price level leads to a lower real GDP.
E)higher inflation leads to a higher nominal interest rate.

Question

Quizplus · Accepted Answer

The short-run Phillips curve illustrates the inverse relationship between unemployment and inflation, indicating that reducing unemployment can lead to higher inflation.

The Short-Run Phillips Curve Presents a Tradeoff Because a