What is the concept of the Phillips Curve in the context of the cost-push inflation theory?

What is the concept of the Phillips Curve in the context of the cost-push inflation theory?

The Phillips Curve is a concept in economics that shows the relationship between inflation and unemployment. In the context of the cost-push inflation theory, the Phillips Curve suggests that there is a trade-off between inflation and unemployment. According to this theory, when there is an increase in production costs, such as wages or raw materials, firms may pass on these higher costs to consumers in the form of higher prices. This leads to an increase in inflation. As a result, in the short run, there is a positive relationship between inflation and unemployment, meaning that when inflation increases, unemployment decreases, and vice versa. This is because higher inflation leads to increased demand for goods and services, which in turn leads to increased production and employment. However, in the long run, this relationship breaks down as expectations of inflation adjust and unemployment returns to its natural rate.