How do you reconcile the vertical long run Phillips curve with the downward sloping short run Phillips curve? Explain with the help of a diagram.

The Phillips curve is a graphical representation of the relationship between inflation and unemployment in an economy. The traditional Phillips curve shows a negative or inverse relationship between the two variables, suggesting that as unemployment decreases, inflation tends to increase, and vice versa. However, there is a distinction between the short run and long run Phillips curves, which helps reconcile their different shapes and implications.

1. Short Run Phillips Curve (SRPC):
   In the short run, the Phillips curve shows a downward-sloping relationship between inflation and unemployment. This implies that when unemployment is low, there is upward pressure on wages as firms compete for workers, leading to higher inflation. Conversely, when unemployment is high, there is downward pressure on wages, resulting in lower inflation or even deflation.

The short-run Phillips curve can be illustrated in a diagram with inflation (π) on the y-axis and unemployment (u) on the x-axis. The curve _______ __________ _____ __________ _________ _________ ______ _____ _________ ______ _________.
______ _______ _______ ________ ____ ___ __________.
___ ____ __________ ______ _______ ________ ____ _____ __________ ____.
__________ ___ ___ ___ ___.
________ ____ ______ _______ _____ _____ _______.
____ ________ _________ ______ __________ _________ _________ _____ ___ _________.
_____ _________ _________ ______ ______ _______ ________ _____ ___.
_________ _________ ____ ____ _______ _______ ______.
______ ______ ____ _________ _____.
____ _________ ________ _____ _______ _____ ______.
______ ______ ______ _________ __________ ___ __________.
_____ _____ _____ _______ ___ ______ _______ ______ __________ ____.
_______ ____ _______ ____ __________ ___ ___.
_______ ______ ___ ______ ______ _____ __________ ______ _______ ___ ____ ______.
_____ _______ _______ _____ __________ _________ _______ ____ ____ _________.
_______ _________ _______ _______ ___ __________ ___ ________ ________ ______ ________.
_________ _____ _________ ___ ________ _____ ________.
______ ____ ____ ___ _________ ____ ______ ________ _________ ___.
_______ __________ ____ _________ ___ ________ ____ _________ ____ ____ ________.
________ ______ ___ __________ _____ ____ _______.
______ ____ ______ ____ ______ __________ ______ ___ ______ _________ _______ ____.
____ _____ _______ _____ _______.
_______ ___ ___ _____ ________ ___ __________ _________ ____ ____.
_______ _________ _______ ___ ___ _____ ___ ____ _________ ___ _________.
________ __________ _________ __________ _____ ___.
____ ____ ____ ____ _________.
_______ _______ ____ ________ __________ ________ _______ _________ ______ _________ ___ ___.
__________ ______ _______ _________ ___.
_______ ________ _________ ________ ________.
____ _____ ________ _______ ________ ______ ________ ________ ________.
______ ________ _________ ______ ____ _______ _______ __________ _______ ________.
______ ____ __________ _______ ___ _________ _____ _____ _____ ______.
_____ ________ ______ __________ _______ _____ _____ ______ __________ ________.
____ _______ _______ ______ _______.
_____ ______ _____ _______ ______.
________ _________ _____ ________ _____ _____ ________ ___.
_____ ________ ________ ___ _____ _______.
_________ _______ _________ ________ ____ _________ _________ ______ ___ ____ _________ __________.
_____ _________ _______ _______ ____ ___.
______ ______ ______ ___ ___.
___ __________ ___ ______ _______ _____ ____ _____ _____.
________ _______ __________ ________ _______ ____ ________ ______ _________ _______.
_________ ________ __________ ______ ______ __________.
__________ _____ __________ _____ ____ ____ __________ _____.
________ ___ _________ _________ __________ ___ _____ ________ _________ _______ ___.
______ _______ ________ ____ ________ ______ _________ ____ _____ _________.
______ ___ _____ _________ ______ ______ ____ ________ _________ __________ __________ ___.
_________ _______ ______ ____ ____ ______ _______ _________ ______ ______.
______ ____ _________ _______ ____ _____ ___ _______ _____ __________ ______ ___.
_____ ______ _____ ____ ___ ________.
________ __________ _________ __________ ________ ____ _____ __________ __________ ________ __________ ________.
_________ _____ ____ _____ ______ ______.
_____ ____ ________ __________ _______ ______ ___.
________ _______ _____ _________ ___.
____ _______ ________ ________ _________.
Get Full Answer on WhatsApp