ABSTRACT
The concept of the demand curve, implies that if prices were lower, sales would be greater, and so on. A Phillips curve or a trade-off curve is a kind of report card on the functioning of the entire economy, and its position, slope, configuration, and shifts depend on a host of things not shown in the diagram itself. Each observation of one level of unemployment and one rate of increase in prices constitutes one point on a trade-off curve. Jay Forrester provides a diagram to illustrate how the long-wave and expansionary monetary policy, could bring shifts in trade-off curves. The observed movements of the economy reflect a combination of "impulses" and "propagation." The impulses, such as investment in capital equipment, may themselves follow a fairly regular cyclical pattern, but it is not clearly established why they should do so. In between, there have been short periods of relative stability, in the sense that inflation and unemployment moved in opposite directions.
