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 ...

Get Foundations of Economics, 8th Edition now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.