The Phillips Curve is steeper at higher rates of inflation and lower levels of unemployment.

Question

Quizplus · Accepted Answer

The Phillips Curve shows the inverse relationship between inflation and unemployment. When the rate of inflation is high, the Phillips Curve becomes steeper, indicating that a small decrease in inflation requires a larger increase in unemployment. Conversely, when unemployment is low, the Phillips Curve is flatter, meaning that a small decrease in unemployment results in a larger increase in inflation. Therefore, the statement is true.

The Phillips Curve Is Steeper at Higher Rates of Inflation