The Phillips Curve BY J.A.SACCO.

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Presentation transcript:

The Phillips Curve BY J.A.SACCO

The Phillips Curve Named after A.W. Phillips, Br. Economist (1950’s) Illustrates the twin objectives of price stability(inflation) and full employment is extremely difficult to achieve Conflict results from the fact that the price level begins to rise before the economy reaches full employment

The Phillips Curve LRPC 1)How does the Phillips The Phillips curve implies a policy trade-off between inflation and unemployment. LRPC 1)How does the Phillips Curve relate to the AD/AS Model. ? 2) How does a shift of AD and AS relate to both? 3) What are the causes of a shift of the SRPC? Inflation Rate 6% --------------------- 5% SRPC Unemployment Rate

The Phillips Curve LRPC Inflation Rate SRPC Unemployment Rate

The Phillips Curve LRPC 1)What does the LRPC represent? 2) How does the LRPC shift? Inflation Rate 6% --------------------- SRPC 5% Unemployment Rate