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Ryyrel

Economics

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What is the historical relationship between rates of unemployment and inflation in the U.S. economy?

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Explanation & Answer

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Hello Ellery,

Clearly, this is a topic that has been explored during many eras in history. This issue was first explored in 1958 by A.W. Phillips and so today we call it the Phillips curve.  Now let's get down to the relationship between unemployment and inflation in the U.S. economy. The theory behind his idea is that as unemployment falls than employees can push for higher wages thus causing inflation.  There was also a time where a time where there was something called stagflation which is where both the employment rate and the economy were both stagnated and at a stand still. The key behind the whole idea is to try to balance the rate of unemployment and inflation.

Please let me know if you need any clarification. I'm always happy to answer your questions.


Anonymous
Excellent resource! Really helped me get the gist of things.

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