- As inflation increases, unemployment decreases
Each point on the Phillips Curve corresponds to a different level of output.
Long run Phillips curve:
- it occurs on the natural rate of unemployment,
- it is represented by a vertical line.
- There is no tradeoff between inflation and unemployment
- the economy produces at a full ouput level
- The LRPC (Long run phillips curve) will only shift if the LRAS curve shifts.
- Increases in unemployment, it will shift LRPC ->
- Decreases in unemployment, it will shift LRPC <-
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ReplyDeleteI really enjoyed your blog! The only thing I would be sure to add is that structural changes in the economy that affect unemployment also CAUSE the LRPC TO SHIFT. I would also suggest that you add a picture of the Phillips Curve, that way you have something to reference when you go over your notes. Other than that, it was very easy to find information because it was very simple and organized. Well done!
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