According to the Phillips curve, an increase in the level of output is associated with:
A)an increase in the expected inflation.
B)a decrease in the nominal interest rate.
C)a decrease in the rate of inflation.
D)an increase in the rate of inflation.

Question

Quizplus · Accepted Answer

The Phillips curve suggests that an increase in the level of output in an economy is associated with an increase in the rate of inflation. This is because higher output typically leads to higher demand for labor, which can drive up wages and, consequently, prices.

According to the Phillips Curve, an Increase in the Level