Philip’s curve shows a trade-off between inflation and unemployment. Unemployment can be reduced by affording to inflation. The concept has been developed out of a study made by British Economist William Philips on the British economy. The Phillips curve brings an inverse relationship between the rate of unemployment and the rate of inflation in an economy. It can serve as a menu between two evils -inflation and unemployment; for the policy makers. Stated simply, the lower the unemployment in an economy, the higher will be the rate of inflation.
