Society Faces a Short-Run Tradeoff between Inflation and UnemploymentThe tradeoff between inflation and unemployment is called the Phillips curve after the economist who first examined this relationship.The tradeoff arises because in the short run prices respond to the quantity of money changes very slowly. Suppose for example that the government reduces the quantity of money in the economy. All prices will not be reduced immediately as a result of this change for many reasons. It may take several years before all firms issue new catalogs or all unions make wage concessions. That is prices are said to be sticky in the short run. On the other hand when the government reduces the quantity of money in the economy it reduces the amount that people spend. Lower spending together with prices that are stuck too high reduce the quantity of goods and services that firms sell. Lower sales in turn cause firms to lay off workers. Thus the reduction in the quantity of money raises unemployment in the short run until prices have fully adjusted to the change.Policymakers can exploit this tradeoff using various policy instruments. For example by changing the the amount it spends the amount it taxes and the amount of money it prints Policymakers can influence the combination of inflation and unemployment the economy experiences