Phillips Curve

A downward sloping curve showing the short run tradeoff between the level of inflation and the level of unemployment in a nation. As the inflation rate increases in the short-run, the unemployment rate decreases, and as unemployment increases, inflation decreases. There is also a long-run curve which is vertical at the natural rate of unemployment showing that in the long run there is no trade off between the price level and the level of unemployment in an economy.

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