BUSINESS: Phillips Curves Unemployment and inflation are inversely related, with one rising as the other falls, and an equation giving the relation is called a Phillips curve after the economist A. W. Phillips (1914–1975).
Between 2000 and 2010, the Phillips curve for the U.S. unemployment rate x and Consumer Price Index (CPI) inflation rate y was
y = 45.4x-1.54 - 1
where x and y are both percents. Use this relation to estimate the inflation rate when the unemployment rate is
a. 3 percent b. 8 percent
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