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When dealing with homework on Phillips Curve, it is important that you have a basic idea of the theory. So here it goes for you!
An introduction to Phillips Curve
Phillips Curve is a concept developed by Economist A. W. Phillips. It states that there is an inverse relationship between inflation and unemployment and this relationship is stable. According to the theory, lower the rate of unemployment in an economy, higher is the wage rates paid to labors.
Philip curve is the graphical representation of this inverse relationship. Shapes of the Philip curve may vary.
During 1960s and 1970s, this concept was exploited by Governments across the world to choose an inflation rate that they wanted to achieve and then expand or contract the economy accordingly to attain this targeted rate. This policy was known as the stop-go policy and was largely dependent on fiscal policies for the said expansion or contraction.
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