Phillips+Curve


 * Phillips Curve**

Sheralee Sarasin

What is the Phillips Curve? The Phillips curve is a graphical representation showing the relationship between unemployment rate and inflation rate. The Phillips Curve is downward sloping because both goals cannot be achieved at the same time. Who is the Phillips behind the Phillips Curve? William Phillips is the man who invented the Phillips Curve. He is an economist and was born in New Zealand. In 1958 he had written a paper entitled “The Relationship between Unemployment and the Rate of change in Money Wages in the United Kingdom 1861-1957”.

The problem with trying to achieve both goals is one affects the other: Unemployment rate goes up=lots of competition for jobs=wages go down=cost of making goods go down=price of goods sold at go down=deflation or a decrease in inflation Unemployment rate goes down=lots of competition for jobs=wages go up=cost of making goods goes up=price of making good goes up=inflation Here are two graphs of the Phillips Curve: