Phillips curve

Phillips curve- represent the  U employment 

Lrpc- occurs at the natural rate of unemployment . 

Represented by a vertical line. 

No trade off between unemployment and inflation in the LR. 

The economy produces at the full employment level. 

Lrpc will only shift if the LRAS curve shifts 

The major lrpc consumption is that more worker benefits create higher natural rates and fewer worker benefits produce lower natural rates 

Srpc, there is a trade off between inflation and unemployment that only occurs during the short run 

Has relevance to Okun law

Since wages are sticky, inflation changes move the points on the srpc.

If inflation persist and the expected rate of inflation then the entire srpc moves upward which causes the situation called stag flation 

If inflation expectation drop, due to new technology or economic growth then the srpc will move downwards. 

Aggregate supply shocks cause the rate of inflation and unemployment to increase 

Supply shocks - rapid and significant increase in resource cost

Misery index- is a combination of inflation and unemployment in any given year . Single digit misery is good