The trade-off between unemployment rates and inflation originates in the

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The trade-off between unemployment rates and inflation is represented by the Phillips curve which shows an upward-sloping relationship between the two variables. This is a result of the upward-sloping AS curve which indicates that as prices increase, firms can increase output levels and hire more workers. As unemployment decreases, wages increase which leads to higher production costs and prices. Therefore, a decrease in unemployment leads to an increase in inflation and vice versa.

The Trade-Off Between Unemployment Rates and Inflation Originates in the