What does the Phillips curve shows the relationship between?

The Phillips curve suggests there is an inverse relationship between inflation and unemployment. The concept behind the Phillips curve states the change in unemployment within an economy has a predictable effect on price inflation.

What does the Phillips curve describe quizlet?

Phillips Curve. a curve that shows the short-run trade-off between inflation and unemployment. shows the combinations of inflation and unemployment that arise in the short run as shifts in the aggregate-demand curve move the economy along the short-run aggregate-supply curve.

What does the Phillips curve describe?

Phillips curve, graphic representation of the economic relationship between the rate of unemployment (or the rate of change of unemployment) and the rate of change of money wages. Named for economist A. William Phillips, it indicates that wages tend to rise faster when unemployment is low.

What basic relationship does the long run Phillips curve describe quizlet?

What basic relationship does the​ long-run Phillips curve​ describe? It indicates unemployment will move toward its natural rate regardless of the inflation rate.

What causes the Phillips curve to shift quizlet?

An adverse supply shock shifts the short-run Phillips curve right. If people raise their inflation expectations, the short-run Phillips curve shifts farther right.

What is the relationship between the short run Phillips curve and the long run Phillips curve?

Key Takeaways The long-run Phillips curve is a vertical line at the natural rate of unemployment, but the short-run Phillips curve is roughly L-shaped. The inverse relationship shown by the short-run Phillips curve only exists in the short-run; there is no trade-off between inflation and unemployment in the long run.

What is the relationship between the short-run Phillips curve and the long run Phillips curve?

How does Phillips curve describe the relation between inflation and unemployment rate quizlet?

The short-run Phillips curve describes a negative relationship between unemployment and inflation. This seems to suggest that policy makers can “buy” lower unemployment if they are willing to pay for it with higher inflation and that policies to reduce inflation will be costly because they will increase unemployment.

What shifts the Phillips curve?

Economists have concluded that two factors cause the Phillips curve to shift. The first is supply shocks, like the Oil Crisis of the mid-1970s, which first brought stagflation into our vocabulary. The second is changes in people’s expectations about inflation.