The Beveridge curve is
A) a positive relationship between unemployment and the inflation rate.
B) a positive relationship between the government deficit and aggregate output.
C) a negative relationship between the vacancy rate and the unemployment rate.
D) a positive relationship between the inflation rate and the nominal interest rate.

Question

Quizplus · Accepted Answer

The Beveridge curve shows the negative relationship between the vacancy rate and the unemployment rate. This means that when there are more job vacancies available, the unemployment rate tends to be lower, and vice versa. Option A is incorrect because it describes the Phillips curve, which shows the trade-off between inflation and unemployment. Option B is incorrect because it does not reflect the Beveridge curve. Option D is incorrect because it describes the Fisher equation, which relates the nominal interest rate to the real interest rate and expected inflation.

The Beveridge Curve Is