ABSTRACT
The interesting phenomenon brought out by the "curve" is that far from there being a "long-run trade-off' between unemployment and inflation, during the period the rate of unemployment was almost totally unaffected by the rate of increase in prices. Australian economic history since 1950 can be divided into distinct periods, corresponding to changes in government. Some economists call vertical straight lines the "long-run Phillips curve" or the long-run "trade-off curve," which exists when expectations are fulfilled and "equilibrium" prevails. The Gough Whitlam government embarked almost immediately on a program of increased social expenditures and encouraging wages and salary increases. Once in power, the Bob Hawke government was quick to distance itself from the previous Labor government of Gough Whitlam. To say that a point is "clearly off the trade-off curve" means, that it is a point that could not have been attained or avoided by orthodox management of the money supply through macroeconomic monetary and fiscal policy alone.
