The Philips curve in the late 20th century The following table shows selected data on unemployment and inflation in the United States between 1961 and 1965.Year19611962196319641965Unemployment Rate(Percent)6.75.54.54.05.73.55.24.5Inflation Rate(Percent)1.0Plot the data for these five years on the following graph.Note: You will not be graded on how you plot the points, but plotting the points accurately on the graph will help you examine the relationshipbetween unemployment and inflation during this period and solve the problems that follow.1.01.31.31.6+Data PointsMacBook AirSKI?5104F11A-ZbongoA+OMwerMirrorReen Shot07...3.06 PMCemureen Shot07...3.18 PMF12 INFLATION RATE (Percent)4.03.53.02.52.01.51.00.50012563 4UNEMPLOYMENT RATE (Percent)789Data PointsWhich of the following statements best describes the relationship between inflation and unemployment in the United States during this time period?O The short-run Phillips curve shifted to the right after actual inflation was higher than expected.O The short-run Phillips curve shifted to the left after actual inflation was lower than expected.O The short-run Phillips curve remained stable.The following graph shows the short-run Phillips curve (SRPC) for the United States in 1961.MacBook AirDULA-Zbongo#ree-07

Phillips curve shows the negative relationship between the inflation rate and unemployment rate.

Answered: The following table shows selected data…

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Unemployment And Inflation

Section: Chapter Questions

Problem 3.7P

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The Philips curve in the late 20th century

The following table shows selected data on unemployment and inflation in the United States between 1961 and 1965.
Year
1961
1962
1963
1964
1965
Unemployment Rate
(Percent)
6.7
5.5
4.5
4.0
5.7
3.5
5.2
4.5
Inflation Rate
(Percent)
1.0
Plot the data for these five years on the following graph.
Note: You will not be graded on how you plot the points, but plotting the points accurately on the graph will help you examine the relationship
between unemployment and inflation during this period and solve the problems that follow.
1.0
1.3
1.3
1.6
+
Data Points
MacBook Air
SKI
?
510
4
F11
A-Z
bongo
A+
O
M
werMirror
Reen Shot
07...3.06 PM
Cemu
reen Shot
07...3.18 PM
F12

INFLATION RATE (Percent)
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
0
1
2
5
6
3 4
UNEMPLOYMENT RATE (Percent)
7
8
9
Data Points
Which of the following statements best describes the relationship between inflation and unemployment in the United States during this time period?
O The short-run Phillips curve shifted to the right after actual inflation was higher than expected.
O The short-run Phillips curve shifted to the left after actual inflation was lower than expected.
O The short-run Phillips curve remained stable.
The following graph shows the short-run Phillips curve (SRPC) for the United States in 1961.
MacBook Air
DUL
A-Z
bongo
#
ree
-07

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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