The Phillips phase of the inflation-unemployment cycle emerges because

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The Phillips phase of the inflation-unemployment cycle emerges because of sticky prices and wages. In this phase, there is an increase in demand, which leads to an increase in employment and a decrease in unemployment. However, the increase in demand also leads to an increase in prices, which erodes the purchasing power of wages. As wages are sticky, they do not adjust immediately, leading to a decrease in real wages. This decrease in real wages causes firms to decrease employment, leading to an increase in unemployment. This cycle continues until wages and prices adjust to the new level of demand.

The Phillips Phase of the Inflation-Unemployment Cycle Emerges Because