Question

Present a thorough analysis of the inverse relationship between inflation and unemployment reflected by the Phillips...

Present a thorough analysis of the inverse relationship between inflation and unemployment reflected by the Phillips curve. Describe the importance of expectations and how they affect the actual relationship between the inflation rate and the unemployment rate.
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

According to Phillips curve at full potential of the GDP in an economy, there is inverse relationship between unemployment and inflation in the short - run.

According to Phillips curve, workers do not expect inflation in the short run,and therefore, even with higher price level, it takes them longer to realize an increase in price level, so they are ready to work at previous wage level, however in real terms wages have fallen down.

Likewise, if they expected inflation, they would demand higher wages to compensate for higher price level, and therefore, employment will not increase.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain the relationship between inflation and unemployment according to the long-run Phillips Curve.?
Explain the relationship between inflation and unemployment according to the long-run Phillips Curve.?
Is the Phillips curve a good model to use in predicting the relationship between inflation and...
Is the Phillips curve a good model to use in predicting the relationship between inflation and unemployment? Please, make sure to answer in details supporting your answer with diagram Thanks in advance
The Samuelson-Solow version of the Phillips curve showed the relationship between unemployment rates and Question 7...
The Samuelson-Solow version of the Phillips curve showed the relationship between unemployment rates and Question 7 options: Real GDP growth rates. price inflation rates. wage inflation rates. imports.
Identify and explain 3 costs associated with inflation Describe the shape of the short run Phillips...
Identify and explain 3 costs associated with inflation Describe the shape of the short run Phillips curve and what it suggests about the relationship between inflation and unemployment
6. An economy has a Phillips curve takes the form of p = 0.04 - 0.5(u...
6. An economy has a Phillips curve takes the form of p = 0.04 - 0.5(u - 0.03) where is the actual inflation rate and u is the unemployment rate. What is the short-run relationship between inflation and unemployment according to the Phillip curve function above? Explain demand pull inflation using the expression of Phillips curve above. Illustrate cost push inflation using the expression of Phillips curve above.
which of the following statements is not a premise associated with the Phillips curve? a) the...
which of the following statements is not a premise associated with the Phillips curve? a) the Phillips curve is applicable in both the short run and long run. b) the Phillips curve can be viewed as a policy menu, a nation could choose low inflation and high unemployment, or high inflation and low unemployment, or anywhere in between c) when unemployment is low, employers have trouble attracting workers, so they raise wages faster inflation in wages soon turns into inflation...
Suppose the short run Phillips Curve is given by: Inflation = Expected Inflation +.2 -4*Unemployment Rate...
Suppose the short run Phillips Curve is given by: Inflation = Expected Inflation +.2 -4*Unemployment Rate        Assume that initially, people expect zero inflation. Draw the short run Phillips Curve and the long run Phillips Curve on a graph On the graph, represent what would happen in the short run if the government decided to run 4% inflation (setting inflation =0.04). On the graph, represent what would happen in the long run if the government decided to run 4% inflation.
According to the Phillips Curve equation, what is the expression for inflation rate when cyclical unemployment...
According to the Phillips Curve equation, what is the expression for inflation rate when cyclical unemployment is zero?
Someone explain the Phillips Curve to me? and non accelerating inflation rate of unemployment plss thanks
Someone explain the Phillips Curve to me? and non accelerating inflation rate of unemployment plss thanks
Use the Phillips curve to show the short‐run trade‐off between inflation and unemployment. When i) demand...
Use the Phillips curve to show the short‐run trade‐off between inflation and unemployment. When i) demand is above its potential and ii) when demand is below its potential.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT