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Nataly [62]
3 years ago
13

According to the equation for the Phillips curve, if nominal wages and labor productivity both increase by 3%, then the inflatio

n rate _____ and unemployment _____.
Business
1 answer:
erastova [34]3 years ago
5 0

Answer:

Increases, decreases

Explanation:

According to the equation for the Phillips curve, if nominal wages and labor productivity both increase by 3%, then the inflation rate increases and unemployment decreases.

The Phillips curve is an economic concept developed by A. W. Phillips stating that <u>inflation and unemployment have a stable and inverse relationship.</u> The theory claims that <u>with economic growth comes inflation</u>, which in turn should lead to more jobs and <u>less unemployment. </u>

<u>Therefore as given in the scenario, wage increase signifies economic growth which will lead to increase in inflation and a decrease in unemployment</u>

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