If you're seeing this message, it means we're having trouble loading external resources on our website. Show If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. Recommended textbook solutions
 Century 21 Accounting: General Journal11th EditionClaudia Bienias Gilbertson, Debra Gentene, Mark W Lehman 1,009 solutions
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Principles of Economics8th EditionN. Gregory Mankiw 1,335 solutions Essentials of Investments9th EditionAlan J. Marcus, Alex Kane, Zvi Bodie 689 solutions What does the Phillips curve graph show?The Phillips curve illustrates that there is an inverse relationship between unemployment and inflation in the short run, but not the long run. The economy is always operating somewhere on the short-run Phillips curve (SRPC) because the SRPC represents different combinations of inflation and unemployment.
How does the Phillips curve move?The Phillips curve shows the short-run relationship between inflation and unemployment. As price level rises, unemployment decreases (point A to point B on Phillips curve). Movement up along the supply curve is mirrored by movement up along the Phillips curve.
What causes the Phillips curve to shift to the left?For example, if frictional unemployment decreases because job matching abilities improve, then the long-run Phillips curve will shift to the left (because the natural rate of unemployment decreases).
What happens when Phillips curve shifts right?If aggregate supply increases, then the Phillips curve shifts to the left. If it decreases, it shifts to the right. As well, things can affect aggregate supply. If expectations see inflation rising, employers may lose employees which can decrease supply and shift the curve to the right.
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In the graph of the phillips curve shown here, an economy moved from point 1 to point 2 to point 3.
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