EconomicsStudent NameUniversity NameDateInstructor NameThere is a clear relationship between unemployment and inflation. These two important terms of economics are inversely related to each other. This relationship makes intuitive sense among economists. AW Philips was the first to report the trade-off between unemployment and inflation, it was named in his honor as the Philips curve. The simple logic is that workers will have to push for higher wages as unemployment rises. The Philips curve suggests that it is not possible to keep the two factors at the same level. If one factor increases, the other would certainly decrease. The basic sequence of ideas behind this belief follows: As more people work, national output increases, which leads to higher wages, which in turn induces buyers to have more money and spend more . which leads consumers to demand more products and services, which finally leads to an increase in the prices of products and services. Ultimately, Phillips demonstrated that unemployment and inflation had an inverse relationship: inflation rose as unemployment fell, and inflation fell as unemployment rose. Given that two important goals for the creators of financial approaches are to keep both inflation and unemployment low, Phillip's disclosure was a reasonable and imperative achievement, which further represented a difficult test: how keep unemployment and inflation low, while a fall in either of them leads to an increase in the inflation rate. other?Indeed, Phillips's turn is by no means hypothetically large. In fact, this poses many problems in the case where it is taken to mean anything other than a general relationship....... middle of paper ....../may/can-monetary-policy- long-term influence/unemployment rate in Australia | 1978-2015 | Data | Chart | Calendar. (nd). Retrieved January 27, 2015 from http://www.tradingnomics.com/australia/unemployment-rateAustralia GDP Growth Rate | 1959-2015 | Data | Chart | Calendar | Forecast. (nd). Retrieved January 27, 2015 from http://www.tradingnomics.com/australia/gdp-growth(nd). Retrieved January 27, 2015 from http://www.cengage.com/resource_uploads/downloads/1424068738_172125.pdfImpact of Monetary Policy on the Economy: Fed Regional View on Inflation, Unemployment and QE3: hearing before the Subcommittee on Domestic Monetary Policy and Technology of the Committee on Financial Services, United States House of Representatives, One. (2011). Washington: USGPOMishkin, F. (2007). Monetary policy strategy. Cambridge, MA: MIT Press.