However, this model was found to be inaccurate in the 1970s, when both inflation and unemployment were high.

In the 1980s, economists like Robert Lucas developed the Expectations-Augmented Phillips Curve, which takes into account the role of expectations in shaping economic outcomes.

According to this model, if people expect inflation to be high, they will demand higher wages to maintain their standard of living, leading to higher prices and inflation.

Conversely, if people expect inflation to be low, they will be more willing to accept lower wages, leading to lower prices and lower inflation.