MYTUTOR SUBJECT ANSWERS

3485 views

What is the difference between the long run and short run Phillips curves?

The Phillips Curve describes the relation between output and inflation. It proposes that there is a positive relation between these two variables, so that decreasing inflation comes at the cost of lower output. The short-run PC is drawn for a given value of inflation expectations, whilst the long-run PC is drawn for when inflation and inflation expectations are equal. 

Different schools of thought have proposed different slopes for the long and short run curves. For example, in the New Keynesian school of thought, the LRPC has a positive slope, implying there is a trade off between inflation and output even in the long-run. However, in the Classical school of thought, there is no such trade off in the long-run. 

The trade-off between inflation and output recieves robust empirical support. For example, Ball (1994) measured the costs of disinflation (a decrease in inflation, which is different from deflation when inflation is negative) across 19 OECD countries, and found that there was a significant positive relationship between disinflation and output loss. 

Kam B. GCSE Economics tutor, A Level Economics tutor, Mentoring -Pers...

3 years ago

Answered by Kam, a GCSE Economics tutor with MyTutor


Still stuck? Get one-to-one help from a personally interviewed subject specialist

106 SUBJECT SPECIALISTS

£20 /hr

Ruth N.

Degree: Economics (Bachelors) - Cambridge University

Subjects offered:Economics, Maths+ 2 more

Economics
Maths
-Personal Statements-
-Oxbridge Preparation-

“Economics Graduate from Cambridge, wanting to share my passion for the discipline”

£18 /hr

Luke S.

Degree: Philosophy, Politics and Economics (Bachelors) - Oxford, Worcester College University

Subjects offered:Economics, Spanish+ 5 more

Economics
Spanish
Maths
History
.TSA. Oxford.
-Personal Statements-
-Oxbridge Preparation-

“I am an aspiring teacher, with a clear and analytic approach to tutoring that comes from an extensive and varied educational background.”

£18 /hr

Akash P.

Degree: MMORSE (Bachelors) - Warwick University

Subjects offered:Economics, Maths+ 1 more

Economics
Maths
Further Mathematics

“First year Mathematics, Operational Research, Statistics and Economics student at Warwick University. Considerable experience at tutoring Maths and Economics.”

MyTutor guarantee

About the author

£18 /hr

Kam B.

Degree: Economics (Masters) - Warwick University

Subjects offered:Economics, Maths+ 1 more

Economics
Maths
-Personal Statements-

“Having been a peer tutor in university, I can understand the specific weaknesses of the student and enable them to maximise their exam performance accordingly”

MyTutor guarantee

You may also like...

Other GCSE Economics questions

Explain why average costs of a business may fall as it experiences growth.

What conditions allow a firm to sell the same product at different prices?

What are the factors that could affect the exchange rate?

Give two disadvantages to the government of rising unemployment.

View GCSE Economics tutors

We use cookies to improve your site experience. By continuing to use this website, we'll assume that you're OK with this. Dismiss

mtw:mercury1:status:ok