Question:
Which of the following is NOT correct in respect of Phillips Curve?
Which of the following is NOT correct in respect of Phillips Curve?
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Logic Tip: Phillips Curve explains the trade-off between inflation and unemployment.
Updated On: May 29, 2026
- It describes inverse relationship between inflation and unemployment
- A.W. Phillips first put this theory in 1985
- Phillips observed that price stability has trade off against unemployment
- If unemployment decreases, inflation increases and vice versa
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The Correct Option is B
Solution and Explanation
Step 1:
Phillips Curve shows an inverse relationship between inflation and unemployment.
Step 2:
The theory was proposed by: \[ \text{A.W. Phillips in 1958} \] not in 1985.
Step 3:
• Inflation and unemployment move inversely
• Lower unemployment generally leads to higher inflation Thus, other statements are correct.
Step 4:
Hence, the incorrect statement is: \[ \boxed{\text{(2)}} \]
Phillips Curve shows an inverse relationship between inflation and unemployment.
Step 2:
The theory was proposed by: \[ \text{A.W. Phillips in 1958} \] not in 1985.
Step 3:
• Inflation and unemployment move inversely
• Lower unemployment generally leads to higher inflation Thus, other statements are correct.
Step 4:
Hence, the incorrect statement is: \[ \boxed{\text{(2)}} \]
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