Question

What tradeoff does a Phillips curve show?

Short answer

A Phillips curve shows the tradeoff among joblessness and expansion in an economy.

Step-by-step solution

Definition of Philip curve

The Phillips curve was created by A .W. Phillips, and is a concept in economics which states that unemployment and inflation have a correlation, which is in nature -- an inverse relationship.

Explanation

This means inflation occurs when economic growth occurs-which leads to more jobs - meaning lower unemployment. The Phillips bend shows a compromise among expansion and joblessness. Rising of inflation leads to a decrease in unemployment, and vice-versa.