Phillips curve illustrates tradeoff from "summary" of EBOOK: Macroeconomics by Rudiger Dornbusch,Stanley Fischer,Richard Startz
The Phillips curve demonstrates a fundamental tradeoff in macroeconomic policy. It shows a negative relationship between inflation and unemployment, suggesting that policymakers face a choice between these two variables. When inflation is low, unemployment tends to be high, and vice versa. This relationship implies that policymakers cannot simultaneously achieve both low inflation and low unemployment levels. The tradeoff illustrated by the Phillips curve is a key concept in macroeconomic theory and policy. It highlights the fact that policymakers must make difficult decisions about the allocation of resources and the pursuit of economic goals. For example, if policymakers focus on reducing unemployment, they may inadvertently cause inflation to rise. Conversely, efforts to combat inflation may result in higher levels of unemployme...
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