WBCS.LIVE practice question

The "Phillips Curve" represents the relationship between which two economic variables?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Inflation and Interest Rates
  2. Inflation and Unemployment
  3. GDP and Savings
  4. Exports and Imports

Correct answer and explanation

Correct answer: Inflation and Unemployment

Explanation: āœ… Correct Answer: B) Inflation and Unemployment šŸ“š Explanation: The Phillips Curve is an economic concept developed by A.W. Phillips that suggests an inverse relationship between the rate of unemployment and the rate of inflation in an economy. According to this theory, when unemployment is low, inflation tends to be high, and vice versa. Policymakers use this relationship to balance the goals of price stability and full employment.