Non Accelerating Inflation Rate of Unemployment (NAIRU)

Phillips curve says More the Inflation, lower the unemployment in economy. That is introduce more and more money in economy which will lower the rate of unemployment.
But during 1970, this notion changed after stagflation was witnessed. Now economists learned, this method to lower unemployment work for short term. In long term, it will only cause inflation to rise high, with no positive effect on unemployment.
Here comes the Concept of NAIRU– Non accelerating inflation rate of unemployment.
-Nairu is the rate of unemployment (People not getting job) that will exist in the economy, if the government try to lower unemployment below NAIRU (By introducing more money), it will only result in increase in inflation & won’t help to NO-JOB guys to get job, rather increase inflation rate.

-So below NAIRU, Govt cannot bring down unemployment, It is the lowest level. At this point rate of unemployment will remain consistent with rate of inflation. Below this point rate of inflation will start moving upward.

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