There is a _____:
A)short-run trade-off between prices and interest rates
B)long-run trade-off between inflation and unemployment
C)short-run trade-off between inflation and unemployment
D)short-run trade-off between inflation and the money supply

Question

Quizplus · Accepted Answer

The short-run Phillips curve shows a negative relationship between inflation and unemployment, indicating a short-run trade-off between inflation and unemployment. Option A is incorrect as there is no direct relationship between prices and interest rates. Option B is incorrect since the long-run Phillips curve shows no trade-off between inflation and unemployment. Option D is incorrect as there is no direct relationship between inflation and the money supply in the short run.

There Is a _____