Final answer:
If the short-run Phillips curve were stable, it would be unusual to see both an increase in inflation and an increase in output.
Step-by-step explanation:
If the short-run Phillips curve were stable, it would deviate from the typical expectations set by the Phillips curve, which posits an inverse relationship between inflation and unemployment. In the standard Phillips curve framework, an increase in inflation is associated with a decrease in output (or GDP) due to the presumed tradeoff between inflation and unemployment.
However, the concept of a stable short-run Phillips curve challenges this traditional notion. A stable Phillips curve implies that changes in inflation do not have a substantial impact on output, or there may be only a minor tradeoff between the two variables. In this scenario, it becomes possible to observe both an increase in inflation and an increase in output simultaneously without the anticipated negative correlation.
The stability of the short-run Phillips curve suggests that the usual constraints imposed by the tradeoff between inflation and output are relaxed. As a result, economic conditions may allow for an expansionary scenario where inflation and output grow concurrently. This departure from the conventional Phillips curve dynamics implies a more nuanced relationship between inflation and output, and it challenges the simplistic notion of a clear tradeoff between the two variables in the short run.
In essence, a stable short-run Phillips curve suggests that economic conditions may evolve in a manner that allows for both inflation and increased output, indicating a departure from the conventional Phillips curve tradeoff dynamics.