C. is producing at a point where output is more than potential GDP. 12 Step-by-step explanation Generated by AI The Phillips Curve illustrates the relationship between inflation and unemployment in an economy. When unemployment is low and inflation is high, it suggests that the economy is overheating. This means that the demand for goods and services is outpacing the economy's ability to produce them, leading to price increases (inflation). Therefore, the economy is producing at a point w