Economics Phillips Curve Questions
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 leads to an increase in inflation, and vice versa. This curve implies that there is a trade-off between unemployment and inflation in the short run, indicating that policymakers can use monetary or fiscal policies to influence the trade-off between these two variables.