Question

The Philips curve describe the relationship between: (a) Savings & investment (b) Marginal tax rate and tax revenue (c) Unemployment rate and inflation rate (d) The budget deficit and the trade deficit

Answer 1

The Phillips curve is an economic concept developed by A. W. Phillips stating that inflation and unemployment have a stable and inverse relationship. The theory claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment. However, the original concept has been somewhat disproven empirically due to the occurrence of stagflation in the 1970s, when there were high levels of both inflation and unemployment.