Phillips Curve

It represents the relationship between inflation & unemployment.
There is a trade off thay only occurs in short run.

Long run occurs @ natural rate of unemployment. Rep by vertical line. 
No trade off between unemployment & inflation in long run which means economy produces @ full employment level. 
Long run curve will shift on if LRAS curve shift.

Frictional, seasonal, structural = long run

Major LRPC assumption is that more workers benefits create higher natural rates & fewer worker benefits create lower natural rates.

SRPC:
There is an inverse relationship between inflation & unemployment.
High inflation = lower employment

Has relevance to okun's law
Since wages are sticky,  inflation changes more the points on SRPC
If inflation persist & insisted rate of inflation rise then the entire SRPC moves upward die to stagflation.  
If inflation expectations drop due to new tech or econ growth then SRPC moves downward

Aggregate supply shock cause both rate of inflation & unemployment to inc. 
Supply shock - rapid and significant inc. in resource cost.

Misery index - combination of inflation & unemployment in any given ysar. Single digit misery is good.

LRPC:
because LRPC exist @ natural rate of unemployment, structural changes in the economy thay affect unemployment also cause LRPC to shift.

Stagflation: when inflation & unemployment increase simultaneously

• During 1946-1964 (baby boom)
• Women's movement
• Civil rights movement
• Vietnam War ends
• Oil embargo 1973 & 1979

Disinflation: reduction in inflation rate from year to year. This occurs when AD declines.

Deflation: general drop in the price level.

Supply shock: cost push