According to macroeconomic theory, evidence that high unemployment may be accompanied by low inflation,

and low unemployment may be accompanied by high inflation is supported by the:

A. neoclassical expenditure-output model.

B. Keynesian cross diagram.

C. Keynesian Phillips curve tradeoff.

D. Keynesian Inflation trade-off model

Question

Social Studies

Cara George

22 April, 16:43

According to macroeconomic theory, evidence that high unemployment may be accompanied by low inflation,

and low unemployment may be accompanied by high inflation is supported by the:

A. neoclassical expenditure-output model.

B. Keynesian cross diagram.

C. Keynesian Phillips curve tradeoff.

D. Keynesian Inflation trade-off model

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Answers (1)

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Jean Beltran · Answer 1

C. Keynesian Phillips curve tradeoff.

Explanation:

In the border of the Phillips curve of Keynesian macroeconomics, there is an explanation that links unemployment and inflation through a tradeoff. In times of high inflation, the economy is hot and companies are labor-intensive, so unemployment is low. However, when recessionary inflationary policies are adopted, consumption and economic activity decline, causing firms to lay off employees to adjust to the new reality of the consumer market.