The relation between Inflation and Unemployment The importance of Phillips Curve Theoretically, it supports Keynesian macroeconomIcs Empirically, it indicates a trade-off between the two most important macroeconomic problems Therefore, solving one problem may cause the other Debates on the Phillips curve(will be presented in the class)The Relation between Inflation and Unemployment • The importance of Phillips Curve: – Theoretically, it supports Keynesian macroeconomics. – Empirically, it indicates a trade-off between the two most important macroeconomic problems. Therefore, solving one problem may cause the other. • Debates on the Phillips curve (will be presented in the class)