Draw the graph · Macro · Phillips curve
A demand boom hits
Drag a curve sideways, or use its arrows. A curve you do not move is a curve you are saying stays put.
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Short-run Phillips curve stays put. Long-run Phillips curve stays put.
A change in aggregate demand moves the economy along the short-run Phillips curve. Unemployment falls below the natural rate and inflation rises, but the curve itself is unchanged because expected inflation is unchanged. Neither the short-run nor the long-run Phillips curve shifts.
Unemployment falls and inflation rises along the unchanged short-run Phillips curve.
Common mistake. Students often shift the SRPC right to 'show more inflation.' A demand boom is a movement along the SRPC, up and to the left. Only changes in expected inflation or supply shocks shift it.
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Lesson: The Phillips Curve