Posts
LeoGlossary: Phillips Curve
25
@leoglossary
··
0 views
1 min read
An economic theory that was put forth in the 1960s by A.W. Phillips.
The theory states that the relationship between inflation and unemployment is inverse and stable. It stems from the idea that economic growth will cause more jobs, leading to a decline in unemployment. With this economic growth is the idea that inflation (price increases) will follow suit.
It was disproven during the 1970s when stagflation reigned supreme. During this period, the relationship between the two was disconnected as both unemployment and inflation were high.
The policies taken by the Federal Reserve in 2022 are based upon the Phillip's curve.
Posted Using LeoFinance Beta
