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the Phillips Curve in the 1970’s may best be explained by way of the concept of the pure price of unemployment, and by distinguishing between a short run and long term Phillips Curve. Suppose there may be an inflationary gap as an alternative. A gap, such as the one within the late 1960’s, caused by demand-pull inflation from the Vietnam War, and Great Society expenditures. The economy is in equilibrium at point a where mixture expenditures crossed the 45 degree line of mixture production and revenue is at $960 billion. But this is $60 billion above the total employment output of $900 billion. In such a case, we all know that there might be robust upward pressures on costs, even though such pressures are not visible in the Keynesian model. The mixture provide curve will shift to the left if the price of an imported resource like oil rises as it did through the oil embargo of 1973 and seventy four. While Amazing car road kids all over printed area rugequilibrium output falls, the value level goes up. This is an instance of value push inflation. Productivity is defined as whole output divided by complete inputs. An increase in productiveness means the financial system can acquire extra actual output from its inputs. If productiveness increases, the average production price of a unit of output will fall, and it will trigger the combination supply curve to
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