Question

how do you figure out the full-employment rate of unemployment by looking at the Phillips curve?

Answer 1

The Phillips curve shows the inverse relationship between inflation and unemployment. The Phillips curve found by the economist A. W Phillips. Whenever the inflation goes down the unemployment would rise and vice versa. The curve had proved wrong in the 1970s when there is high unemployment and high inflation in the economy and this said that the trade off between inflation and the unemployment only exists in the short run and in the long run inflation and the unemployment are unrelated. The long run Phillips curve vertical at the full employment level of output. The full employment level of output occurs at the long run Phillips curve.