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Question
Microeconomics
Posted 8 months ago
Which of the following curves illustrates that there is a tradeoff between inflation and the unemployment rate?
Choose 1 answer:
(A) The aggregate demand (AD) curve
(B) The short-run Phillips curve (SRPC)
(C) The long-run Phillips curve (LRPC)
(D) The production possibilities curve (PPC)
(E) The demand for money
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Answer from Sia
Posted 8 months ago
Solution
a
Definition of the Short-Run Phillips Curve (SRPC): The SRPC illustrates the inverse relationship between inflation and unemployment in the short run
b
Tradeoff Explanation: The SRPC shows that as inflation increases, unemployment tends to decrease, and vice versa, indicating a tradeoff between the two
Answer
(B) The short-run Phillips curve (SRPC)
Key Concept
Short-Run Phillips Curve (SRPC)
Explanation
The SRPC demonstrates the tradeoff between inflation and unemployment, where higher inflation is associated with lower unemployment in the short run.
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