How does the Phillips Curve illustrate the trade-off between inflation and unemployment?

Economics Phillips Curve Questions



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How does the Phillips Curve illustrate the trade-off between inflation and unemployment?

The Phillips Curve illustrates the trade-off between inflation and unemployment by showing that there is an inverse relationship between the two variables. According to the Phillips Curve, when unemployment is low, inflation tends to be high, and vice versa. This trade-off suggests that policymakers face a choice between reducing unemployment and accepting higher inflation, or reducing inflation and accepting higher unemployment. The curve implies that there is a limit to how low unemployment can be pushed without causing inflation to rise, and vice versa.