Phillips Curve- MM Flashcards
1
Q
What does the traditional Phillips curve establish?
A
A link between inflation and unemployment- suggesting a trade-off between them
2
Q
What is on the 1) x and 2) y axis of the Phillips curve diagrams?
A
1) Unemployment
2) Inflation
3
Q
What school designed the traditional Phillips curve?
A
Keynesian school
4
Q
What discredited the Phillips curve?
A
Stagflation- high inflation and high unemployment
5
Q
What other diagram supports the idea of the Phillips curve?
A
Keynesian AS/AD diagram
6
Q
What does the Austrian/neo-classical school suggest to do with the Phillips curve?
A
Policies that aim to reduce unemployment will lead to inflation, as well as the change only being temporary as well
