What Is Phillips Curve?

The relationship between inflation and unemployment has been debated amongst economists and politians for decades. One such economist Bill Phillips at the London School of Economics in 1958 stated that a stabe relationship existed between unemployment and inflation. Phillips curve shows that when unemployment is low inflation is high an when unemployment is high inflation is low. So they is an inverse relationship between the two. This can be further explained by the following.

When un employment is low, workers will be in a strong position to press dor increase in wage . Whereas when unemployment rate is high , more workers compete for the job and wage raises are held down. So the phillips curve tells us that government can choose its combination of when unemployment and wages. if can choose low unemployment and be prepared to face high inflation. In the 1960 and 1970s the pillips curve faced considerabel criticism. One base was that workers are concerned with real and not money wages  and there might be a short term trade off relationship between the two but there is no long term relationship.

Phillips curve (PC) is macroeconomics term which has an opposite connection among unemployment and inflation.

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en.wikipedia.org