Multiple choice

The empirically fitted relationship between the rate of change of money wages and rate of unemployment is known as

  1. Baumol's Hypothesis

  2. Keynesian Model

  3. Friedman's Model

  4. Phillip's Curve
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D Correct answer
Explanation

In economics, the Phillips curve is a historical inverse relationship between the rate of unemployment and the rate of inflation in an economy. Stated simply, lower the unemployment in an economy, the higher the rate of inflation. While it has been observed that there is a stable short run trade off between unemployment and inflation, this has not been observed in the long run.

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