I was hoping someone would clarify the Short Run Phillips Curve. To be more specific, how the unexpected inflation moves along the line. Also, how this relates to Long Run Phillips Curve.
m3coupe, it is not unexpected inflation moving along the line. Rather, see it as Unemployment rate moving along the line with Unexpected Inflation rate. Here Unexpected Inflation is the cause and Unemployment is the effect and not the other way. May be, if you read the text again with this in mind, it will make more sense.
Yes it is the unemplyement that would result from an unexected infaltion by the central bank… if the inflation is weell forcasted and the observed inflation is in line with the calculated inflatiion, then unemployment does not increase, when inflation decreases and vice versa… Hence the curve is downward sloping