AP Macroeconomics : Short-run Phillips Curve Graphs
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Example Questions
Example Question #1 : Graphs
The short-run Phillips curve depicts which of the following relationships?
A tradeoff between employment and inflation
A direct and positive relationship between employment and the real interest rate
A tradeoff between unemployment and inflation
A direct and positive relationship between unemployment and inflation
A tradeoff between unemployment and inflation
The short-run Phillips curve indicates an inverse relationship between inflation and unemployment. According to the short-run Phillips curve, as unemployment goes up, inflation goes down, and as inflation goes up, unemployment goes down.
The correct answer is therefore "A tradeoff between unemployment and inflation." Recall that a tradeoff refers to an inverse relationship.
The other answer choices are all distortions of the predictions of the short-run Phillips curve.
Example Question #2 : Graphs
Which of the following is the best definition of the concept behind the Phillips Curve?
The relationship between government spending and the multiplier effect
The relationship between worker pay and productivity.
The relationship between unemployment and inflation
The relationship between net exports and GDP
The relationship between unemployment and inflation
The Phillips Curve is meant to express the short-run tradeoff between inflation and unemployment.
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