economics medium True/False

The short-run Phillips Curve illustrates a direct, positive relationship between the rate of inflation and the rate of unemployment.

  1. True
  2. False

Answer: False

The short-run Phillips Curve demonstrates an *inverse* (negative) relationship between inflation and unemployment. It suggests that policymakers face a trade-off: stimulating the economy to lower unemployment will inevitably lead to higher inflation, while contracting the economy to fight inflation will cause unemployment to rise.

Topic Macroeconomics - Curves
Exam Relevance UPSC Prelims, SSC CGL, Banking
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