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) 1989 5.0 4.5 1988 4.0 3.5 1967 3:0 2.5 2.0 1965 1964 1.5 1983 1961 1.0 0.5 0 3.0 3.5 40 45 5.0 5.5 6.0 8.5 7.0 UNEMPLOYMENT RATE (Percent) What happened to the inflation rate between 1965 and 1969? The inflation rate decreased from 1.9% to 1.5%. The inflation rate increased by 3 percentage points. The inflation rate decreased by 2 percentage points. O The inflation rate increased from 2.9% to 4.3%. ? If the unemployment rate had been 4.0% during the 1960s, the inflation rate would most likely have been: INFLATION RATE (Percent) 1989 5.0 4.5 1988 4.0 3,0 25 20 1.5 1.0 0.5 1987 1965 10 3.0 3.5 4.0 4.5 5.0 1964 1983 1981 5.5 6.0 6.5 7.0 UNEMPLOYMENT RATE (Percent) What happened to the inflation rate between 1965 and 19697 The inflation rate decreased from 1.9% to 1.5%. The inflation rate increased by 3 percentage points. The inflation rate decreased by 2 percentage points. The inflation rate increased from 2.9% to 4.3%. + If the unemployment rate had been 4.0% during the 1960s, the inflation rate would most likely have been: 3.0% 5.5% 6.0% 2.7% decrease increase Based on the graph, to reduce the inflation rate from 3.5% to 1.5%, the unemployment rate should points. by percentage
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) 1989 5.0 4.5 1988 4.0 3.5 1967 3:0 2.5 2.0 1965 1964 1.5 1983 1961 1.0 0.5 0 3.0 3.5 40 45 5.0 5.5 6.0 8.5 7.0 UNEMPLOYMENT RATE (Percent) What happened to the inflation rate between 1965 and 1969? The inflation rate decreased from 1.9% to 1.5%. The inflation rate increased by 3 percentage points. The inflation rate decreased by 2 percentage points. O The inflation rate increased from 2.9% to 4.3%. ? If the unemployment rate had been 4.0% during the 1960s, the inflation rate would most likely have been: INFLATION RATE (Percent) 1989 5.0 4.5 1988 4.0 3,0 25 20 1.5 1.0 0.5 1987 1965 10 3.0 3.5 4.0 4.5 5.0 1964 1983 1981 5.5 6.0 6.5 7.0 UNEMPLOYMENT RATE (Percent) What happened to the inflation rate between 1965 and 19697 The inflation rate decreased from 1.9% to 1.5%. The inflation rate increased by 3 percentage points. The inflation rate decreased by 2 percentage points. The inflation rate increased from 2.9% to 4.3%. + If the unemployment rate had been 4.0% during the 1960s, the inflation rate would most likely have been: 3.0% 5.5% 6.0% 2.7% decrease increase Based on the graph, to reduce the inflation rate from 3.5% to 1.5%, the unemployment rate should points. by percentage
Chapter1: Making Economics Decisions
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