If the economy is experiencing lower levels of unemployment, the short-run Phillips curve suggests that ____ additional employment can be purchased at ____ rates of inflation.
A)greater; relatively low
B)greater; higher
C)lower; lower
D)No such employment-inflation relationship is suggested by the Phillips curve.

Question

If the economy is experiencing lower levels of unemployment, the short-run Phillips curve suggests that ____ additional employment can be purchased at ____ rates of inflation.
A)greater; relatively low
B)​greater; higher
C)lower; lower​
D)​No such employment-inflation relationship is suggested by the Phillips curve.

Quizplus · Accepted Answer

The short-run Phillips curve suggests that lower levels of unemployment (indicating greater employment) are associated with higher rates of inflation. This reflects a trade-off where achieving lower unemployment comes at the cost of higher inflation.

If the Economy Is Experiencing Lower Levels of Unemployment, the Short-Run