Economics Phillips Curve Questions
The Phillips Curve is a concept in economics that shows the relationship between inflation and unemployment. In the context of inflation targeting, the Phillips Curve suggests that there is a trade-off between inflation and unemployment. According to this theory, when unemployment is low, inflation tends to be high, and vice versa. Inflation targeting refers to a monetary policy strategy where central banks set specific inflation targets and adjust interest rates or other policy tools to achieve those targets. The Phillips Curve helps policymakers understand and manage this trade-off by providing insights into the relationship between inflation and unemployment.