Phillips Found a Negative Relation Between

question 26

Multiple Choice

Phillips found a negative relation between

• A)output and unemployment.
• B)output and employment.
• C)wage inflation and unemployment.
• D)None of the above is correct.

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Definitions:

Short-Run Aggregate Supply

The total production of goods and services in an economy at different price levels over a short period, during which some production costs are fixed.

Potential Output

The highest level of real GDP that can be sustained over the long term without increasing inflation.

Price Level

The average of all current prices for goods and services in an economy, reflecting the cost of living.

Real GDP

Gross Domestic Product corrected for the effects of inflation, offering a better measure of the true scale and expansion of an economy.