CIMA BA1 · Chapter 2 · Question 5 of 10
The original Phillips curve suggested that:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) There is a short-run trade-off between the rate of inflation and the rate of unemployment
Explanation
The Phillips curve showed an inverse relationship: lower unemployment tended to be associated with higher wage and price inflation, and vice versa. The monetarist view that inflation results from money supply growth is a separate theory.
More Macroeconomic policy and the business cycle MCQs
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- Q9Which of the following is an example of a supply-side policy?
- Q10The term 'crowding out' in macroeconomics refers to:
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