Who is Phillips Curve?

The Phillips Curve is like a special rule that shows how inflation and unemployment can be connected in a country’s economy.

Imagine you're playing with your toys at home. If you have a lot of toy cars, you might not need to play with the blocks as much, it's like when there are many jobs available, people don’t have to work as hard to find one. That means unemployment is low.

Now, if you're playing with your toys and suddenly there’s a big party at the park, everyone wants to go, so you might not get to play with all your favorite toys right away. This is like when inflation happens, prices of things go up because people are spending more money.

The Phillips Curve says that when unemployment goes down, inflation usually goes up, just like when you're having fun at the park, you might need to wait longer for your favorite toy.

Think of a bakery. If there’s lots of work (like many customers), the bakers are busy and don’t have time to take breaks, so unemployment is low. But they also need more ingredients, which can make things cost more, so prices go up, meaning inflation happens.

Sometimes, though, people might expect prices to keep going up, and that can change how the rule works, but that’s a story for another day!