The equation by Friedman and Phelps of a relationship between the unemployment rate and its natural rate can be summarised as:

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The equation by Friedman and Phelps is commonly known as the Phillips curve, which shows a negative relationship between unemployment rate and inflation. The equation can be expressed as Unemployment rate = Natural rate of unemployment - a(Actual inflation - Expected inflation), where "a" is the Phillips curve coefficient. This equation suggests that as the actual inflation rate exceeds the expected inflation rate, the unemployment rate falls below its natural rate, implying an increase in demand for goods and services and a tightening of the labor market.

The Equation by Friedman and Phelps of a Relationship Between