Which curve demonstrates the inverse relationship between inflation and unemployment?

The Phillips curve illustrates the inverse relationship between inflation and unemployment, proposing that lower unemployment in an economy is associated with higher inflation rates, and vice versa. This concept emerged from empirical observations made in the late 1950s by economist A.W. Phillips, who noted that in the short run, as unemployment decreases, inflation tends to increase due to greater demand for goods and services, which drives prices higher.

In contrast, other curves like the demand and supply curves focus primarily on the relationship between price levels and quantity of goods and services in the market, rather than on the interplay between inflation and unemployment. The Adam Smith curve is not a recognized economic concept in this context. Thus, identifying the Phillips curve as the correct answer provides a clear understanding of how macroeconomic variables such as inflation and unemployment relate to one another.