Economists in the 1960s believed that the Phillips curve relationship would

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Economists in the 1960s believed that the Phillips curve relationship would provide policies that would trade off unemployment for inflation. The Phillips curve showed an inverse relationship between unemployment and inflation, suggesting that policymakers could reduce unemployment by accepting higher inflation and vice versa. This trade-off was thought to exist in the short run, but in the long run, the Phillips curve was expected to be vertical or nearly so, meaning that changes in aggregate demand would only lead to changes in prices, not employment. However, later developments showed that the Phillips curve relationship was not stable over time and that policymakers could not trade off inflation for unemployment in the long run.

Economists in the 1960s Believed That the Phillips Curve Relationship