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The following graph shows the combinations of unemployment and inflation that existed in United States from 1961 through 1969.

The following graph shows the combinations of unemployment and inflation that existed in United States from 1961 through 1969.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The following graph shows the combinations of unemployment and inflation that existed in the United States from 1961 through 1969. **Graph Explanation:** The graph plots unemployment rates (x-axis, in percent) against inflation rates (y-axis, in percent) from 1961 to 1969. Each point is marked with the corresponding year. The trend observed shows a negative relationship: as the unemployment rate increases, the inflation rate tends to decrease. Here are some key observations from the graph: - 1961: Unemployment rate at its highest around 6.7% with inflation rate below 2%. - 1969: Inflation rate peaks above 4.5% with unemployment rate around 3.5%. **Hint:** Use the graph to answer the following questions. Click on any black point (plus symbol) on the graph to get its exact coordinates. **Questions:** 1. Which of the following statements about the relationship between the unemployment and inflation data for 1961–1969 is false? - A lower unemployment rate is associated with a higher inflation rate. - There was a negative relationship between unemployment and inflation. - The unemployment rate peaked at 6.7%. - There was no tradeoff between unemployment and inflation. 2. The points on the graph represent observations along the U.S. economy’s Phillips curve during the 1960s. If the inflation rate had been 2.5% during the 1960s, the unemployment rate would most likely have been: - 2.8% - 6.0% - 4.1% - 5.5%
Transcribed Image Text:The following graph shows the combinations of unemployment and inflation that existed in the United States from 1961 through 1969. **Graph Explanation:** The graph plots unemployment rates (x-axis, in percent) against inflation rates (y-axis, in percent) from 1961 to 1969. Each point is marked with the corresponding year. The trend observed shows a negative relationship: as the unemployment rate increases, the inflation rate tends to decrease. Here are some key observations from the graph: - 1961: Unemployment rate at its highest around 6.7% with inflation rate below 2%. - 1969: Inflation rate peaks above 4.5% with unemployment rate around 3.5%. **Hint:** Use the graph to answer the following questions. Click on any black point (plus symbol) on the graph to get its exact coordinates. **Questions:** 1. Which of the following statements about the relationship between the unemployment and inflation data for 1961–1969 is false? - A lower unemployment rate is associated with a higher inflation rate. - There was a negative relationship between unemployment and inflation. - The unemployment rate peaked at 6.7%. - There was no tradeoff between unemployment and inflation. 2. The points on the graph represent observations along the U.S. economy’s Phillips curve during the 1960s. If the inflation rate had been 2.5% during the 1960s, the unemployment rate would most likely have been: - 2.8% - 6.0% - 4.1% - 5.5%
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