Q. Consider the following statements with respect to the Philip curve?
Select the correct answer using the codes given below:

1 only

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2 only

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Both 1 and 2

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Neither 1 nor 2

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Solution

The correct option is D
Neither 1 nor 2
Explanation:

Statement 1 is incorrect: As per the Philip Curve there is an inverse relationship between the inflation and unemployment (Not directly proportional).

Statement 2 is incorrect: As per the Philip Curve, Higher inflation is associated with lower unemployment and low level of inflation with high levels of unemployment.

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Similar questions

Q41.Consider the following statements:

1. Phillips Curve is representation of the relationship between tax rates and tax revenue collected by governments.

2. Laffer curve is a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result within an economy

Which of the above statement(s) is/are correct?

Theory	Description
1. Phillips Curve	Inverse relationship between inflation and unemployment rate
2. Engel Curve	Negative relationship between price and demand
3. Lorenz Curve	Positive relationship between tax rate and tax revenue

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