The Phillips Curve
In the Short Run
- The Phillips Curve represents a trade off between inflation and unemployment.
- Inverse Relationship
- Inflation Up, Unemployment Down
- Each point on the Phillips Curve corresponds to a different level of output.
The Long Run Phillips Curve
- Occurs at the natural rate of unemployment
- Represented by a vertical line
- No trade off between inflation and unemployment
- Economy produces at the full employment output level
- The LRPC will only shift if the LRAS curve shifts
- Increases in unemployment LRPC ---->
- Decreases in unemployment LRPC <---
- Structural changes in the economy that affect unemployment will also cause the LRPC to shift
- Inflation Up, Unemployment Down
- Occurs at the natural rate of unemployment
- Represented by a vertical line
- No trade off between inflation and unemployment
- Economy produces at the full employment output level
- The LRPC will only shift if the LRAS curve shifts
- Increases in unemployment LRPC ---->
- Decreases in unemployment LRPC <---
- Structural changes in the economy that affect unemployment will also cause the LRPC to shift
- Increases in unemployment LRPC ---->
- Decreases in unemployment LRPC <---
- Structural changes in the economy that affect unemployment will also cause the LRPC to shift
Your notes were very easy to read and short to the point, they weren't long notes which made it so much better, however the Philip's curve itself is a somewhat hard concept to learn it takes a bit more time to understand and I think what would have helped that process is that if you put in some kind of a visual aid or a teaching video o fasten the process of learning it up, due to the different shift and etc. But other than that you notes were pretty good.
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