Macroeconomics (9th Edition)
Macroeconomics (9th Edition)
9th Edition
ISBN: 9780134167398
Author: Andrew B. Abel, Ben Bernanke, Dean Croushore
Publisher: PEARSON
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Chapter 12, Problem 1RQ
To determine

Philips curve and the relationship the curve holds with the U.S. data

Expert Solution & Answer
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Explanation of Solution

As per the Phillips curve, there has been an empirical negative relationship that exists between inflation and unemployment. Based on the U.S. Data, the traditional Phillips curve can appear to be somewhat fixed with expected inflation and there can be a natural rate of unemployment that needs to be fixed.

Based on U.S. data, there has been stable or lower inflation, yet there is a substantial unemployment rate. The inflation is so far stable, due to which the business has fewer targets to focus on the growing demand and to produce substantially. Due to this, there are fewer jobs and there is higher unemployment. This proves with the Philips curve theory.

Economics Concept Introduction

Introduction: The Phillips curve is defined as an economic concept that explains the inflation and the unemployment that can lead to a lack of stability and there is an inverse relationship. The theory related to the growing economic growth and inflation can help to determine more jobs and less unemployment.

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