The Phillips curve
A) is the same as a country's production possibilities frontier..
B) is upward sloping.
C) illustrates the Fed's choice between inflation and unemployment in the long run.
D) illustrates the Fed's choice between inflation and unemployment in the short run.
E) illustrates the Fed's choice between inflation and tax revenues in the short run.

Question

Quizplus · Accepted Answer

The Phillips curve illustrates the Fed's choice between inflation and unemployment in the short run. It shows the inverse relationship between unemployment and inflation, implying that a decrease in unemployment leads to an increase in inflation and vice versa. The Fed can use monetary policy to adjust the trade-off between inflation and unemployment in the short run.

The Phillips Curve