Economics Aggregate Demand And Supply Questions
The concept of the short-run Phillips curve is a graphical representation that shows the inverse relationship between the unemployment rate and the rate of inflation in the short run. It suggests that when the economy is operating below its potential level of output, a decrease in unemployment will lead to an increase in inflation, and vice versa. This curve is based on the idea that there is a trade-off between unemployment and inflation in the short run, known as the Phillips curve trade-off.