Question

Since the Great Recession of 2007–2009.

Answer 1

Answer: C

The movement of the unemployment rate and inflation rate has been inconsistent with a stable Phillips Curve

Step-by-step explanation:

The Phillips curve is an economic model suggesting a negative relationship between the unemployment rate and inflation. The model, therefore, implies that a fall in unemployment should lead to an increase in inflation. However, there is a doubts among economists about whether the Phillips curve is an appropriate model to forecast inflation. The doubt is based upon the issues which presented itself during, and after, the Great Recession. During the Recession, the U.S faced a rise in the unemployment rate and according to predictions from the Phillips curve, the rise in the unemployment rate should have yielded a greater decrease in inflation. Much greater than the decrease the U.S. experienced. It

seems like the relationship between inflation and unemployment, once regarded reliable, has weakened. Researchers have been trying to understand why inflation has been behaving in this way.