Phillips curve

Question 1

graph of short run Phillips curve

Answer 1

-x: unemployment, y: wage growth
-curve: downward sloping SRPC and goes negative

Question 2

what does Phillips curve tell us in short run

Answer 2

-conflict between inflation and unemployment and how wage growth affects unemployment and how AD affects it

Question 3

stagflation and phillips curve

Answer 3

-high inflation and high unemployment
-negative supply-side shock, Phillips curve ships upwards opposite does opposite

Question 4

long-run Phillips curve graph and changes

Answer 4

graph:
-inflation y, unemployment x
-same as short-run curve
changes:
-for AD it is the same, but it will lead to a rise in SRAS as firms demand higher wages. SRPC rises but output at the same
-LRPC is upward sloping