What is the Phillips Curve?

The Relationship Between Unemployment & Inflation

The Phillips Curve aims to plot the relationship between inflation and unemployment. It was first put forward by British Economist, AW Phillips.

Philips theorized that inflation and unemployment have a predictable and inverse relationship. Meaning as inflation rises, unemployment falls and vice versa.

The theory goes that as the economy grows, it adds more jobs which leads to a reduced unemployment rate. Then as the labor market tightens and the…