Relationship between inflation and unemployment

One of my Year 12 AS Economics students asks what is the relationship between inflation and unemployment. The first theory that springs to mind is the Phillips curve but this is generally not expected on the OCR AS economics course.

At AS I'd expect students to use a standard AS- AD diagram to show any link between inflation and unemployment. For instance,an increase in AD causes short run economic growth. Higher output requires more labour so unemployment falls. 

However given spare capacity in the upward sloping shape of the AS curve beyond Y1 (due to shortages and bottlenecks in key industries), the increase in AD results in a rise in the price level from P1 to P2, thus exerting inflationary pressure.

So an increase in aggregate demand results in inflation and reduce unemployment.  

However, does a fall in unemployment always coincide with inflation? No. Any increase in real GDP up to Y1 results in more output and less unemployment but with a constant price level - there is non-inflationary growth

So like so many things in economics, falling unemployment may or may not be associated with inflation depending upon assumptions eg the starting position and the price elasticity of aggregate supply.

The above analysis suggests that unemployment and inflation can be linked but the cause an increase in AD. any relationship between unemployment and inflation is best analysed using the Phillips curve - an A2 topic