31.1 The Short-Run Phillips Curve
MyEconLab Concept Video
We can have low inflation and low unemployment. To see why, you need to understand the long-run Phillips curve and a temporary tradeoff called the short-run Phillips curve. The short-run Phillips curve shows the relationship between the inflation rate and the unemployment rate when the natural unemployment rate and the expected inflation rate remain constant.
Figure 31.1 illustrates the short-run Phillips curve. Here, the natural unemployment rate is 6 percent and the expected inflation rate is 3 percent ...
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