# The Inflation-Unemployment RelationshipThe following graph shows the combinations of unemployment and inflation that existed in the United States from 1961 through 1969.**Hint:** Use the graph to answer the following questions. Select any blue point (circle symbol) on the graph to get its exact coordinates.### Graph Description:- **Axes:** - X-axis: Unemployment Rate (Percent) - Y-axis: Inflation Rate (Percent)- **Data Points:** - The graph features a downward-sloping curve with points representing each year from 1961 to 1969. - Points labeled: - 1969 at approximately (3.5%, 5.0%) - 1968 at approximately (3.7%, 4.5%) - 1967 at approximately (3.8%, 3.0%) - 1966 at approximately (3.9%, 2.5%) - 1965 at approximately (4.0%, 1.9%) - 1964 at approximately (5.0%, 1.5%) - 1963 at approximately (5.5%, 1.5%) - 1962 at approximately (5.5%, 1.2%) - 1961 at approximately (7.0%, 1.0%)### Question:What happened to the inflation rate between 1962 and 1965?- The options are: - The inflation rate decreased by 2 percentage points. - The inflation rate increased by 0.5 percentage points. - The inflation rate increased from 4% to 5%. - **The inflation rate decreased from 1.9% to 1.5%**.### Explanation:The points on the graph represent observations along the U.S. economy's Phillips curve during the 1960s. The Phillips curve illustrates an inverse relationship between inflation and unemployment rates. The points on the graph represent observations along the U.S. economy’s Phillips curve during the 1960s.*Use the black point (plus symbol) to help you answer the questions that follow. (Note: You will not be graded for any adjustments made to the graph.)*1. If the inflation rate had been 3.5% during the 1960s, the unemployment rate would most likely have been: - ○ 3.7% - ○ 4.5% - ○ 5.0% - ○ 6.5%2. Based on the graph, to reduce the *unemployment rate* from 5.5% to 4.5%, the inflation rate should increase by __________ percentage points.

According to the Phillips curve there is an inverse relationship between inflation and unemployment.…

The following graph shows the combinations of unemployment and inflation that existed in the United States from 1961 through 1969. Hint: Use the graph to answer the following questions. Select any blue point (circle symbol) on the graph to get its exact coordinates. E (Percent) 5.0 4.5 4.0 3.5 3.0 1969 1968 1967 Scratch Point

The following graph shows the combinations of unemployment and inflation that existed in the United States from 1961 through 1969. Hint: Use the graph to answer the following questions. Select any blue point (circle symbol) on the graph to get its exact coordinates. E (Percent) 5.0 4.5 4.0 3.5 3.0 1969 1968 1967 Scratch Point

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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