In the short run this change should have lowered unemployment and increased inflation.
The economic relationship between the rate of unemployment (or the rate of change in unemployment) and the rate of change in money earnings is depicted graphically by the Phillips curve. It reflects the belief of economist A. William Phillips that wages tend to increase more quickly when unemployment is low.
What is long run Phillips curve?
A graph showing the inverse link between the short-term inflation rate and the unemployment rate. LRPC, or long-run Phillips curve The LRPC is vertical at the natural rate of unemployment, demonstrating that there is no long-term correlation between unemployment and inflation.
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