LeoGlossary: Phillips Curve

An economic theory that was put forth in the 1960s by A.W. Phillips.

The theory states that the relationship between

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 ( 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

in 2022 are based upon the Phillip's curve.

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