The origin of the Phillips curve is the idea that an increase in
A)AD will lead to more inflation and more unemployment.
B)AD will lead to more inflation and lower unemployment.
C)AS will lead to lower inflation and lower unemployment.
D)AS will lead to less inflation and higher unemployment.

Question

Quizplus · Accepted Answer

The Phillips curve is based on the idea that there is an inverse relationship between unemployment and inflation. Specifically, the curve shows that as unemployment decreases, inflation tends to increase, and as unemployment increases, inflation tends to decrease. Therefore, an increase in AD would lead to more inflation and lower unemployment, which is represented by the upward slope of the Phillips curve.

The Origin of the Phillips Curve Is the Idea That