2. The inflation-unemployment relationship The following graph shows the combinations of unemployment and inflation that existed in the United States for selected years between 1961 and 1969. Click on any blue point (circle symbol) on the graph to get its exact coordinates. You can also use the black point (cross symbol) to find the coordinates of other points along the curve. (Note: You will not be graded for any adjustments made to the graph.) INFLATION RATE (Percent) 5.0 4.5 4.0 3.5 3.0 1.5 1.0 0.5 0 3.0 1969 O 3.5 1968 O 1967 1965 1964 1963 4.0 4.5 5.0 5.5 6.0 UNEMPLOYMENT RATE (Percent) 1961 6.5 7.0 + (?)
2. The inflation-unemployment relationship The following graph shows the combinations of unemployment and inflation that existed in the United States for selected years between 1961 and 1969. Click on any blue point (circle symbol) on the graph to get its exact coordinates. You can also use the black point (cross symbol) to find the coordinates of other points along the curve. (Note: You will not be graded for any adjustments made to the graph.) INFLATION RATE (Percent) 5.0 4.5 4.0 3.5 3.0 1.5 1.0 0.5 0 3.0 1969 O 3.5 1968 O 1967 1965 1964 1963 4.0 4.5 5.0 5.5 6.0 UNEMPLOYMENT RATE (Percent) 1961 6.5 7.0 + (?)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:2. The inflation-unemployment relationship
The following graph shows the combinations of unemployment and inflation that existed in the United States for selected years between 1961
and 1969.
Click on any blue point (circle symbol) on the graph to get its exact coordinates. You can also use the black point (cross symbol) to find the
coordinates of other points along the curve. (Note: You will not be graded for any adjustments made to the graph.)
INFLATION RATE (Percent)
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
3.0
3.5
1969
1968
O
1967
4.0
1965
5.0
1964
4.5
5.5
6.0
UNEMPLOYMENT RATE (Percent)
1963
6.5
1961
O
7.0
(?)
Transcribed Image Text:Which of the following statements about the relationship between the unemployment and inflation data for 1961-1969 is true?
O The unemployment rate peaked at 3.5%.
O There is tradeoff between unemployment and inflation.
O A lower unemployment rate is associated with a lower inflation rate.
O There is a positive relationship between unemployment and inflation.
If the unemployment rate had been 4.0% during the 1960s, the inflation rate would most likely have been:
O 6.0%
O 2.7%
O 5.5%
O 3.0%
increase/decrease
Based on the graph, to reduce the unemployment rate from 5.5% to 4.5%, the inflation rate should 28
points.
by
percentage
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