Wage stickiness refers to the tendency of wages to adjust slowly to changes in economic conditions.
This can have an impact on the inflation-unemployment relationship because it can make it difficult for businesses to adjust their labor costs in response to changes in the economy.
For example, if inflation is high, businesses may want to lower their labor costs by reducing wages.
However, if wages are sticky, they may be unable to do so, leading to a decline in employment.
Inflation expectations refer to the beliefs that people have about the future rate of inflation.
These expectations can impact the inflation-unemployment relationship because they can influence the behavior of businesses and individuals.
For example, if people expect inflation to be high in the future, they may demand higher wages to compensate for the rising cost of living.
This can lead to a rise in inflation, which can in turn lead to a decline in employment.