The Phillips curve represents the relationship between inflation and unemployment rate. Named after A. W. H. Phillips, he saw that there is an inverse relation being that when the unemployment rate is high, inflation tend to be low and the other way around.
Unemployment rate ↑ = number of workers↑ = wage↓ = cost of production↓ = Price ↓
Unemployment rate ↓ = quantity of workers↓ = wage↑ = cost of production↑ = Price ↑
REFERENCES:
Dr. Stephanie Powers, "Monetary Policy", (class notes, PowerPoint presentation slide no. 40, accessed April 15, 2012).
Phillips Curve
The Phillips curve represents the relationship between inflation and unemployment rate. Named after A. W. H. Phillips, he saw that there is an inverse relation being that when the unemployment rate is high, inflation tend to be low and the other way around.
Unemployment rate ↑ = number of workers↑ = wage↓ = cost of production↓ = Price ↓
Unemployment rate ↓ = quantity of workers↓ = wage↑ = cost of production↑ = Price ↑
REFERENCES:
Dr. Stephanie Powers, "Monetary Policy", (class notes, PowerPoint presentation slide no. 40, accessed April 15, 2012).
http://econlib.org/library/Enc/PhillipsCurve.html
http://www.bized.co.uk/virtual/bank/economics/mpol/inflation/causes/theories4.htm