Phillip's Curve

The Phillips Curve illustrates an observed relationship between unemployment and inflation: when unemployment is low, inflation tends to be higher, and when unemployment is high, inflation tends to be lower. This suggests a trade-off, where efforts to reduce unemployment might lead to increased inflation, and controlling inflation could result in higher unemployment. However, this relationship isn't always consistent over time, as other factors influence inflation and employment levels. Economists use the Phillips Curve to understand short-term economic policies' impacts, but it’s important to remember it’s a simplified representation of complex economic dynamics.