In economics, the inflation graph in Figure 2.2 is called the Phillips curve, after A. W. Phillips, a New Zealander associated with the London School of Economics. Until Phillips published his ideas in the 1950s, many economists believed that unemployment and inflation were linearly related. Read an article on the Phillips curve (the source cited with Figure 2.2 would be a good place to start), and write a paragraph on the nature of unemployment in the U.S. economy.

Figure 2.2.

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Inflation, % 30 20 10 0 -10 T T 0.0 0.5 Tangent lines - 2.5 Slope = 0.5 5.0 =-14 7.5 Unemployment, % Slope = 10.0 2.5 2.5 = -0.4 12.5 15.0 U