Answered: It has been noted that both…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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It has been noted that both unemployment and inflation are rising at the same time.

A. According to the Philips curve, impossible
B. signifies that there is no more unemployment in the economy.
C. would indicate that the Philips curve is an invalid idea,
C. would imply that the concept of the Philips curve is invalid;
d. would imply a shift in the Philips curve; and
e. only achievable in the near run.

Definition Definition Relationship between the rate of unemployment and the rate of inflation that shows that the lower the initial rate of unemployment, the greater the rise in wage rate corresponding to a given rise in the rate of unemployment. The Phillips curve assumes that the ratio between prices and nominal wage rates is constant in the short run. Presented graphically, the Phillips curve shows an inverse relationship between the rate of unemployment and the rate of inflation.

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