Philips Curve Calculator

✖Expected Inflation is simply the rate at which consumers, businesses, investors expect prices to rise in the future.ⓘ Expected Inflation [λ^e]			+10% -10%
✖Fixed Positive Coefficient means that the value of the coefficient is independent and greater than zero.ⓘ Fixed Positive Coefficient [β]			+10% -10%
✖Unemployment Today means the rate of unemployment in an economy in today's scenario.ⓘ Unemployment Today [U_t]			+10% -10%
✖Unemployment at Natural Rate refers to the minimum unemployment rate stemming from real or voluntary economic forces.ⓘ Unemployment at Natural Rate [U_n]			+10% -10%

✖Philips Curve is an economic theory that states that inflation and unemployment have a stable and inverse relationship.ⓘ Philips Curve [λ_t]

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Formula

✖

Philips Curve

Formula

`"λ"_{"t"} = "λ"^{"e"}-"β"*("U"_{"t"}-"U"_{"n"})`

Example

`"500000"="1000000"-"1000"*("5000"-"4500")`

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Philips Curve Solution

STEP 0: Pre-Calculation Summary

Formula Used

Philips Curve = Expected Inflation-Fixed Positive Coefficient*(Unemployment Today-Unemployment at Natural Rate)
λ_t = λ^e-β*(U_t-U_n)
This formula uses 5 Variables

Variables Used

Philips Curve - Philips Curve is an economic theory that states that inflation and unemployment have a stable and inverse relationship.
Expected Inflation - Expected Inflation is simply the rate at which consumers, businesses, investors expect prices to rise in the future.
Fixed Positive Coefficient - Fixed Positive Coefficient means that the value of the coefficient is independent and greater than zero.
Unemployment Today - Unemployment Today means the rate of unemployment in an economy in today's scenario.
Unemployment at Natural Rate - Unemployment at Natural Rate refers to the minimum unemployment rate stemming from real or voluntary economic forces.

STEP 1: Convert Input(s) to Base Unit

Expected Inflation: 1000000 --> No Conversion Required
Fixed Positive Coefficient: 1000 --> No Conversion Required
Unemployment Today: 5000 --> No Conversion Required
Unemployment at Natural Rate: 4500 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

λ_t = λ^e-β*(U_t-U_n) --> 1000000-1000*(5000-4500)

Evaluating ... ...

λ_t = 500000

STEP 3: Convert Result to Output's Unit

500000 --> No Conversion Required

FINAL ANSWER

500000 <-- Philips Curve

(Calculation completed in 00.004 seconds)

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Created by Aashna

IGNOU (IGNOU), India

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BMS College of Engineering (BMSCE), Bangalore

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< 12 Microeconomics Calculators

Gross Domestic Product

Go Gross Domestic Product = Private Consumption+Gross Investment+Government Consumption+Net Exports of Goods and Services

Philips Curve

Go Philips Curve = Expected Inflation-Fixed Positive Coefficient*(Unemployment Today-Unemployment at Natural Rate)

Rate of Inflation

Go Rate of Inflation = (Ending Consumer Price Index-Initial Consumer Price Index)/Initial Consumer Price Index

Equation of Motion for Capital Stock

Go Equation of Motion for Capital Stock = (1-Depreciation)*Capital Used Today+Investment Today

GDP Deflator

Go Gross Domestic Product Deflator = Nominal Gross Domestic Product/Real Gross Domestic Product*100

Price Elasticity of Demand

Go Price Elasticity of Demand = Percentage Change in QD/Percentage Change in Price

Marginal Efficiency of Investment

Go Marginal Efficiency of Investment = Prospective Yield/Supply Price*100

Average Variable Cost

Go Average Variable Cost = Total Variable Cost/Quantity of Each Order

Average Total Cost

Go Average Total Cost = Total Cost/Quantity of Each Order

Marginal Cost

Go Marginal Cost = Change in Total Costs/Change in Output

Net Exports of Goods and Services

Go Net Exports of Goods and Services = Exports-Imports

Investment Multiplier

Go Investment Multiplier = 1/(1-Marginal Propensity to Consume)

Philips Curve Formula

Philips Curve = Expected Inflation-Fixed Positive Coefficient*(Unemployment Today-Unemployment at Natural Rate)
λ_t = λ^e-β*(U_t-U_n)

What do you mean by Philips Curve ?

The concept behind the Phillips curve states the change in unemployment within an economy has a predictable effect on price inflation. The inverse relationship between unemployment and inflation is depicted as a downward sloping, concave curve, with inflation on the Y-axis and unemployment on the X-axis. Increasing inflation decreases unemployment, and vice versa. Alternatively, a focus on decreasing unemployment also increases inflation, and vice versa.

How to Calculate Philips Curve?

Philips Curve calculator uses Philips Curve = Expected Inflation-Fixed Positive Coefficient*(Unemployment Today-Unemployment at Natural Rate) to calculate the Philips Curve, Philips Curve states an inverse relationship between inflation and the unemployment rate. As in, the higher the economy’s inflation rate, the lower the unemployment rate will be, and vice-versa. Philips Curve is denoted by λ_t symbol.

How to calculate Philips Curve using this online calculator? To use this online calculator for Philips Curve, enter Expected Inflation (λ^e), Fixed Positive Coefficient (β), Unemployment Today (U_t) & Unemployment at Natural Rate (U_n) and hit the calculate button. Here is how the Philips Curve calculation can be explained with given input values -> 500000 = 1000000-1000*(5000-4500).

FAQ

What is Philips Curve?

Philips Curve states an inverse relationship between inflation and the unemployment rate. As in, the higher the economy’s inflation rate, the lower the unemployment rate will be, and vice-versa and is represented as λ_t = λ^e-β*(U_t-U_n) or Philips Curve = Expected Inflation-Fixed Positive Coefficient*(Unemployment Today-Unemployment at Natural Rate). Expected Inflation is simply the rate at which consumers, businesses, investors expect prices to rise in the future, Fixed Positive Coefficient means that the value of the coefficient is independent and greater than zero, Unemployment Today means the rate of unemployment in an economy in today's scenario & Unemployment at Natural Rate refers to the minimum unemployment rate stemming from real or voluntary economic forces.

How to calculate Philips Curve?

Philips Curve states an inverse relationship between inflation and the unemployment rate. As in, the higher the economy’s inflation rate, the lower the unemployment rate will be, and vice-versa is calculated using Philips Curve = Expected Inflation-Fixed Positive Coefficient*(Unemployment Today-Unemployment at Natural Rate). To calculate Philips Curve, you need Expected Inflation (λ^e), Fixed Positive Coefficient (β), Unemployment Today (U_t) & Unemployment at Natural Rate (U_n). With our tool, you need to enter the respective value for Expected Inflation, Fixed Positive Coefficient, Unemployment Today & Unemployment at Natural Rate and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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