The Phillips curve for the 1970s,compared to that for the 1950s and 1960s
A) revealed a lower (3 percent) natural rate of unemployment.
B) was shifted downward to the left and appeared more nearly horizontal.
C) was a more predictable phenomenon and guide to policy formation.
D) resulted from a rightward shift in aggregate supply.
E) indicated the presence of strong inflationary expectations.

Question

Quizplus · Accepted Answer

The Phillips curve for the 1970s indicated the presence of strong inflationary expectations, contrasting with earlier decades. This period was marked by stagflation, where high inflation and high unemployment coexisted, challenging the previously observed inverse relationship between inflation and unemployment suggested by the Phillips curve.

The Phillips Curve for the 1970s,compared to That for the 1950s