The Friedman-Phelps inflation-augmented Phillips curve suggested that inflation would be ________ related to the expected inflation rate and ________ related to the unemployment rate.
A)positively; positively
B)positively; negatively
C)negatively; positively
D)negatively; negatively

Question

Quizplus · Accepted Answer

The Friedman-Phelps inflation-augmented Phillips curve posits that inflation is positively related to expected inflation (as expectations of higher inflation lead to actual higher inflation) and negatively related to the unemployment rate (as lower unemployment can lead to higher inflation due to increased demand for goods and services).

The Friedman-Phelps Inflation-Augmented Phillips Curve Suggested That Inflation Would Be