Phillips Curve Classroom Activities for AP Macroeconomics

A Phillips curve activity earns its period if students walk out able to explain why a central bank cannot buy permanently lower unemployment with a little more inflation. Six activities below use the live graph at /sandbox/phillips-curve, each with a timing, the mechanics, and the debrief question that makes it land.

Worksheets are good at practicing a procedure students already understand. They are poor at building the intuition first, which is why a class can shift a short run curve correctly on a quiz and still believe, wrongly, that the trade-off it draws is a permanent menu a government can pick from.

1. Predict then reveal, 5 minutes

Put the AD/AS sandbox and the Phillips curve sandbox side by side on the projector, or sketch AD/AS on the board next to it. Name a demand side shock, an interest rate cut or a jump in government spending. Before touching anything, every student writes a one line prediction: what happens to inflation, what happens to unemployment. Then move the AD curve on one graph and, by hand, move the matching point on the Phillips curve, so the class watches inflation rise and unemployment fall together across the two graphs.

The debrief question: on the Phillips curve, did the economy move along the curve or did the curve itself move? Movement along is correct, because a demand shock plays out entirely as a slide along the existing short run curve, the mirror image of a movement along SRAS. Students who guessed a shift are the ones this warm up is for.

2. The mirror relay, 20 minutes

Split the class into two teams and put the AD/AS graph on one side of the board, the Phillips curve on the other. One member of team A moves the equilibrium point on AD/AS by naming a shock out loud. Team B has ten seconds to place a sticky dot on the Phillips curve at the matching point, no discussion once the clock starts.

Score a point for a correct placement, and read the wrong ones aloud instead of just marking them wrong, because the specific error is the lesson. A team that pairs "higher price level, lower output" with "lower inflation, lower unemployment" has the sign on inflation backward, not just a placement slip.

The debrief question: why does a demand shock move both graphs the same way? Because a rightward AD shift raises the price level and output on the AD/AS graph, while on the Phillips curve that same shock lowers unemployment and raises inflation, since both readings come from the one shock. That shared direction is what most worksheets never test, and it is what the exam rewards.

3. The expectations round, 15 minutes

Hand every student an index card. Each writes one number: the inflation rate they expect next year. Collect the cards, average them on the board, and mark that average as the expected inflation baked into the current short run curve.

Now reveal an actual inflation rate higher than the guesses. Walk the class through what happens next: wage setters and firms who feel behind rebuild the higher number into contracts and prices, and the short run curve shifts up to match it. Point out that the economy moves twice, once along the old curve when actual inflation first surprised everyone, and once as the curve itself relocates once expectations adjust.

The debrief question carries the whole unit: once wages and prices catch up to actual inflation, what happens to unemployment? It returns to the natural rate, on the same vertical long run curve as before, but at a permanently higher inflation rate. That answers the biggest misconception in this unit, that policy can trade a little more inflation for a little less unemployment forever. It can, for a while. Then expectations catch up and the trade disappears, leaving only the higher inflation behind.

4. The shock sort, 15 minutes

Write eight events on slips: a jump in oil prices, a wave of retirements, a burst of consumer confidence, a minimum wage increase, a technology that speeds up job matching, a spike in expected inflation, an interest rate cut, a drought that damages crops. Students sort each into three bins: moves along the short run curve, shifts the short run curve, moves the long run curve.

The trap is built in. A change in aggregate demand, a rate cut or a confidence swing, belongs in the first bin, a movement along the existing curve. A change in per unit production costs or in expected inflation, an oil shock, belongs in the second bin, because it changes the inflation rate available at every unemployment rate, which is stagflation when the shock is adverse. A change in the structure of the labor market, faster job matching or a wave of retirements, belongs in the third bin, because it moves the natural rate of unemployment itself.

The debrief question: what single test sorts all three bins? Ask whether the event changes what the economy demands, what it costs firms to produce, or who counts as unemployed in the first place. Each answer points to a different bin, and students who can name the test stop guessing.

5. The policy trade-off debate, 20 minutes

Before either side may argue, both sides must agree in writing on where the economy currently sits: at the natural rate, above it, or below it, and on which curve, short run or long run. Skipping this step is what makes a policy debate go nowhere, because two sides arguing from two different starting points are not actually disagreeing about policy.

Once the class agrees on the starting point, assign one side to argue for expansionary policy that pushes unemployment below the natural rate, and the other to argue against it on the grounds of what happens once expectations adjust. Require both sides to name the short run Phillips curve and the vertical long run Phillips curve directly in their argument.

The debrief question: is there any unemployment rate a central bank can hold below the natural rate without inflation accelerating forever? No. The short run answer is yes, temporarily. The long run answer is the vertical curve, and it does not move for a demand shock no matter how long the policy runs.

6. Build the model yourself, 10 minutes

Open the sandbox, hand control to a student, and let the class call out the shocks. Raise expected inflation. Now add an oil shock on top of that.

The debrief question: once expected inflation and an oil shock have both pushed the short run curve up, what has to happen for the economy to find its way back down to the long run curve? Inflation expectations have to fall back in line with actual inflation, which shifts the short run curve back down until it crosses the vertical long run curve again at the natural rate.

Unscripted and student driven, which makes it a strong closer, because the questions a class asks at the sandbox reveal exactly which of the five activities above still has not landed.

Sequencing

A workable arc across the unit: predict then reveal to expose the guess a class makes without thinking, mirror relay to connect the same shock across AD/AS and the Phillips curve, expectations round to kill the permanent trade-off misconception directly, shock sort to separate a movement from the two kinds of shift, policy debate to apply all of it under pressure, sandbox to close. Read the full mechanics behind the AD/AS side of the relay in how the AD-AS model reaches equilibrium, and see the shock sort's hardest case worked through in why stagflation breaks the demand policy playbook. For a full walk through of the short run tradeoff, NAIRU, and how to draw the graph for the exam, see the Phillips curve explained.

Full timings, objectives, and exit tickets for a Phillips curve unit are in the lesson plans, and the model itself is taught step by step in the unemployment and inflation module.