Economics For Today
Economics For Today
9th Edition
ISBN: 9781305507074
Author: Tucker, Irvin B.
Publisher: Cengage Learning,
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Chapter 27, Problem 1SQP
To determine

Define Phillips curve.

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Explanation of Solution

The Phillips curve represents the inverse relationship between inflation and unemployment in the economy. If inflation increases, unemployment decreases and vice versa. An increase in the aggregate demand increases the inflation rate. This in turn reduces the unemployment rate in the economy.

Economics Concept Introduction

Philips curve: The Phillips curve shows the inverse relationship between unemployment and inflation rate in an economy.

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