00:01
So here we need to describe the short -run trade -off.
00:03
So let me draw a diagram between the two of these things, inflation and unemployment.
00:10
The short -run trade -off says, and this is often called the phillips curve, right, when people talk about it in the real world, says that high inflation means low unemployment.
00:25
That is when the economy is running hot, you tend to see high on inflation, but low unemployment.
00:32
And conversely, when you have low inflation, that means the economy is running cold.
00:37
You tend to see high unemployment.
00:39
And this is often called the phillips curve, right? so that phillips curve means that when inflation is high, output is low, and you are thinking about a phillips curve like that.
00:53
That would be an illustration of the short run tradeoff.
00:56
And if this trade -off is true, it suggests that here there are two points, that a policymaker, like the federal reserve, might be able to move the economy between these two points, right? so if the fed wants to go from a to b, right, a to b means you are having less inflation and more unemployment, right? that's what's going...