Economics Phillips Curve Questions
The Phillips Curve shows the inverse relationship between the unemployment rate and the inflation rate in an economy. During an expansionary phase of the business cycle, when the economy is growing and unemployment is low, the Phillips Curve suggests that inflation tends to increase. Conversely, during a contractionary phase of the business cycle, when the economy is contracting and unemployment is high, the Phillips Curve suggests that inflation tends to decrease. Therefore, the Phillips Curve helps to explain the relationship between the business cycle and inflation.