If the short-run Phillips curve was a straight line with a very steep slope, the inflation costs of reducing unemployment:
A)are fairly low.
B)are fairly high.
C)depend on the current rate of inflation.
D)rises as the economy approaches full employment.

Question

If the short-run Phillips curve was a straight line with a very steep slope, the inflation costs of reducing unemployment:
A)​are fairly low.
B)​are fairly high.
C)​depend on the current rate of inflation.
D)​rises as the economy approaches full employment.

Quizplus · Accepted Answer

A short-run Phillips curve with a very steep slope indicates that a small reduction in unemployment would lead to a significant increase in inflation. This means that the inflation costs of reducing unemployment are fairly high.

If the Short-Run Phillips Curve Was a Straight Line with a Very