1. Economic data has shown that a relationship between an economy's Inflation rate and Unemployment rate does exist at times and does not exist at other times. What is this relationship called and provide a graph of the relationship? How (what tools) has the government attempted to manage this relationship?
please answer each part....
There usually exist a negative relationship in short run between inflation and unemployment rate which is called Philips curve while in long run there does not exist negative relationship because economy reach to their natural level of output where unemployment level is also at its natural level which makes vertical Philips curve.
Government use fisacl policies to maintain this relation. They adopt expansionary fiscal policy which raise inflation rate by raising aggregate demand and reducing unemployment due to rise in output level while contractionary fiscal policy reduce inflation rate by reducing aggregate demand and raise unemployment due to fall in output level.
1. Economic data has shown that a relationship between an economy's Inflation rate and Unemployment rate...
Explain the relationship between the 10 years data of
inflation rate and 10 years data unemployment rate in India using
the Long Run Phillips Curve
10 year data of Unemployment Rate 10 year data of Inflation Rate 42 008 2 010 302 2914 018 014 2011
1. Which of the following best describes the relationship between inflation and unemployment? A) As inflation increases, unemployment will always increase B) It includes periods in which there is a trade-off between the two, but is overall more nuanced and varied C) There is never a trade-off between inflation and unemployment D) It adheres to the Phillips curve trade-off in both the short and long run time periods 2. A large decrease in government purchases due to a reduction in...
1. Is the Phillips curve a myth? Intertemporal tradeoff between inflation and unemployment After the World War II, empirical economists noticed that, in many advanced economies, as unemployment fell, inflation tended to rise, and vice versa. The inverse relationship between unemployment and Inflation, was depicted as the Phillips curve, after William Phillips of the London School of Economics. In the 1950s and 1960s, the Phillips curve convinced many policy makers that they could use the relationship to pick acceptable levels...
What happened to the inflation rate between the year when the
unemployment rate was 5.5% and the year when it was 4.5%?
The inflation rate decreased by 2 percentage points.
The inflation rate decreased from 1.9% to 1.5%.
The inflation rate increased by 0.5 percentage points.
The inflation rate increased from 4% to 5%.
The points on the graph represent observations along the U.S.
economy’s Phillips curve during the 1960s. If the inflation rate
had been 4% during the 1960s,...
3. Discuss the relationship between the natural rate of unemployment, Un, and the Phillips curve, 1lt – itt-1 = -a(ut – Un); and explain why the natural rate of unemployment is also known as the non-accelerating inflation rate of unemployment (NAIRU). Hints: The central assumption used to derive the Phillips curve, Tet – 1lt-1 = -a(Ut – Un), was that tę = Tt-1, where tę represents expected inflation. What does this mean? Assume that Ut = Un. What happens to...
7. Historically, there tends to be an inverse relationship between the rate of inflation and the rate of unemployment (often illustrated by the Phillips Curve), with few exceptions. b. In the 1970s, the US economy displayed two periods of both high inflation (in the double-digits), and high unemployment, called stagflation. What were the unique events/trends taking place which led to this unusual phenomenon? Use the model of aggregate supply and aggregate demand to help explain your answer. c. In the...
An economy has the natural rate of unemployment equal to 8.3%. The inflation rate in the previous period was 8.3%. If there is no cyclical unemployment and the country has adaptive expectations, what is the difference (in percentage points) between the inflation rate and the expected inflation rate?
a) Find the time series data (quarterly or monthly) on the unemployment rate, inflation rate and real GDP growth in the U.S. from 1980 to 2005, and discuss whether the Okun’s Law is valid or not. Then, discuss whether the Phillips curve exists in the U.S. economy (you have to report your data source and or the website). b) Which recession is most severe in terms of its depth and the duration of unemployment? c) Why unemployment rises when the...
8. The Phillips curve is based on the observed negative relation between the rate of inflation and the unemployment rate. That is, decreases in the unemployment rate tend to be associated with increases in the rate of inflation a) Given what you know about the relation between the unemployment rate and the GDP gap, restate the Phillips curve in terms of inflation and the GDP gap. b) Based on the AD-IE model, and given your answer in (a), explain why...
We have discussed two models that describe the relationship between inflation and economic growth. Which of the following is a property of the New Keynesian Model but NOT the Real Business Cycle (RBC) Model? Monetary policy has no effect on long run economic growth Recessions can be caused by a fall in aggregate demand. Prices are fully flexible in both the short and long run. All the above are properties of the RBC model. None of the above are properties...