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Business, Economics, MBA, revision

The Phillips Curve and its demise

What Is meant by the Phillips Curve and account for its breakdown in the 1970s. 

The Phillips Curve shows a correlation seen between 1861 and 1950 showing the relationship between % inflation and the rate of unemployment. It shows a negative correlation hyperbola between the two sets of results (ie in general as unemployment rate decreases the % inflation increases).

Definition: Inflation is a persistant tendency for prices to rise.

This was seen to support Keynesian Economics, and was a politicians ‘dream’ scenario as it demonstrated that government intervention through fiscal policy could control inflation. For example through positive fiscal measures (ie reduction in taxes and increased government spending) then unemployment fell, but inflation increased. As the economy ‘heated up’, they could choke off the fiscal stimulis, and this would reduce inflation by increasing unemployment.

This relationship worked very well up until the 1970’s, when stagflation set in. Stagflation was a combination of both stagnation and high inflation and gave way to Monetarism.

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About loganjehall

I focus on building an internal culture focussed on listening to and working alongside customers to build value for all stakeholders. Real lasting change that understands the real needs of the customer is the only way to ensure a dynamic constant state of learning and innovation. I am a highly experienced sales, marketing and business professional with wide ranging experience in varied industries. Having worked in both B2B and B2C I understand sales and business is really about P2P (people to people) and therefore always focus on relationships and engagement. "Business is socialising with a purpose" (Gaping Void) Passion, people, vision, strategy, customers, advocates, believers, innovation, customer engagement, social, knowledge management and appropriate use of technology are vital in the attainment of business goals. I am a co-founder of Movebubble, a new technology startup in #Proptech. This blog is really here to allow me to develop my voice and ideas, and gain feedback from a wider audience than just the lecture or breakout room. Hopefully i can introduce some interesting points, and experiment with digital, marketing, engagement, social media and SEO techniques and tips i am learning on the way. I hope you enjoy my posts, please let me know what you think with some feedback.

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  1. Pingback: The evolution of economic theory and practice up to 2007 « loganjehall - January 10, 2012

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