Long Run Phillips Curve : Natural Rate of Unemployment :: Short Run Phillips Curve : ?

The Long Run Phillips Curve shows that in the long term, there is no trade-off between inflation and unemployment; this means that the economy will settle at a natural rate of unemployment regardless of the inflation rate. In contrast, the Short Run Phillips Curve indicates that there can be a temporary trade-off between inflation and unemployment, where lower unemployment may come with higher inflation. An example of this is during an economic boom when businesses hire more workers, leading to lower unemployment but potentially driving up prices due to increased demand. Therefore, the relationship can be summarized as the Long Run Phillips Curve reflecting a stable unemployment rate, while the Short Run Phillips Curve shows how inflation and unemployment can move together in the short term. In this way, the Short Run Phillips Curve is related to the natural rate of unemployment by showing the short-term fluctuations around this natural rate.