The short-run Phillips curve shows the relationship between ________, holding constant the expected inflation rate and the natural unemployment rate.
A)the inflation rate and the economic growth rate
B)unemployment and the economic growth rate
C)the inflation rate and the unemployment rate
D)growth and potential GDP.
E)the inflation rate and the growth of the money wage rate.

Question

Quizplus · Accepted Answer

The short-run Phillips curve shows the relationship between inflation rate and the unemployment rate, holding constant the expected inflation rate and the natural unemployment rate. Therefore, choice C is the correct answer. Choice A is incorrect because economic growth rate is not a factor in the short-run Phillips curve. Choice B is incorrect because the short-run Phillips curve relates inflation rate and unemployment rate, not economic growth rate and unemployment rate. Choice D is incorrect because potential GDP is not a factor in the short-run Phillips curve. Choice E is incorrect because the short-run Phillips curve does not relate to the growth of the money wage rate, but rather to the relationship between inflation rate and unemployment rate.

The Short-Run Phillips Curve Shows the Relationship Between ________, Holding