Respuesta :
(C) according to the phillips curve, unemployment and inflation are positively related in neither the long run nor the short run.
According to the Phillips curve, unemployment and inflation have a steady inverse connection. According to William Phillips' theory, inflation follows economic expansion and should result in more jobs and lower unemployment.
The occurrence of stagflation in the 1970s, when there were high levels of both inflation and unemployment, has somewhat refuted the basic theory behind the Phillips curve.
The Phillips curve's underlying theory contends that changes in unemployment within an economy have a predictable impact on inflation of prices. The inverse link between inflation and unemployment is represented as a concave, downward-sloping curve, with unemployment on the X-axis and inflation on the Y-axis. Inflation increases as unemployment declines and vice versa. On the other hand, concentrating on lowering unemployment also raises inflation, and vice versa.
In the 1960s, it was thought that any fiscal stimulus would boost aggregate demand and start the subsequent consequences. Companies raise wages to compete and draw talent from a smaller talent pool as labor demand rises, the number of unemployed employees falls as a result, and unemployment rates decline. Corporate salary costs rise, and businesses pass those costs forward to customers by raising prices.
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