Define the short-run Philips curve .

Question

Want to see more full solutions like this?

Answer 1

Question

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.

Chapter 17, Problem 1SQP

To determine

Define the short-run Philips curve.

Expert Solution & Answer

Explanation of Solution

Short-run Philips curve represents the inverse relationship between inflation and unemployment in the economy. When inflation increases, then unemployment decreases and vice versa. An increase in the aggregate demand increases the inflation rate and this in turn, reduces the unemployment rate in the economy.

Economics Concept Introduction

Philips curve: Philips curve shows the inverse relationship between unemployment and inflation rate in the economy.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

True or false? An increase in inflation expectations shifts the short-run Phillips curve right and has no effect on the long-run Phillips curve.

As with demand and supply analysis, changes in the economy can cause both shifts of and movements along the short-run Phillips curve. Which of the following would cause a shift of the short-run Phillips curve? Check all that apply. An increase in government spending A decrease in short-run aggregate supply An increase in the expected inflation rate

The following graph shows an economy in long-run equilibrium at point A (grey star symbol). The vertical line is the long-run Phillips curve (LRPC). The downward-sloping curve labeled SRPC, is the short-run Phillips curve passing through point A. SRPC, LRPC 7 SRPC, 1 1 2 3 4 5 7 8 UNEMPLOYMENT RATE (Percent) Which of the following is true along SRPC,? The actual unemployment rate is 6%. The expected inflation rate is 5%. The actual inflation rate is 5%. The natural rate of unemployment is 3%. INFLATION RATE (Perent)

Answer 2

Question

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.

Chapter 17, Problem 1SQP

To determine

Define the short-run Philips curve.

Expert Solution & Answer

Explanation of Solution

Short-run Philips curve represents the inverse relationship between inflation and unemployment in the economy. When inflation increases, then unemployment decreases and vice versa. An increase in the aggregate demand increases the inflation rate and this in turn, reduces the unemployment rate in the economy.

Economics Concept Introduction

Philips curve: Philips curve shows the inverse relationship between unemployment and inflation rate in the economy.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

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.

Chapter 17, Problem 1SQP

To determine

Define the short-run Philips curve.

Expert Solution & Answer

Explanation of Solution

Short-run Philips curve represents the inverse relationship between inflation and unemployment in the economy. When inflation increases, then unemployment decreases and vice versa. An increase in the aggregate demand increases the inflation rate and this in turn, reduces the unemployment rate in the economy.

Economics Concept Introduction

Philips curve: Philips curve shows the inverse relationship between unemployment and inflation rate in the economy.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

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.

Chapter 17, Problem 1SQP

To determine

Define the short-run Philips curve.

Expert Solution & Answer

Explanation of Solution

Short-run Philips curve represents the inverse relationship between inflation and unemployment in the economy. When inflation increases, then unemployment decreases and vice versa. An increase in the aggregate demand increases the inflation rate and this in turn, reduces the unemployment rate in the economy.

Economics Concept Introduction

Philips curve: Philips curve shows the inverse relationship between unemployment and inflation rate in the economy.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 17, Problem 1SQP

To determine

Define the short-run Philips curve.

Expert Solution & Answer

Explanation of Solution

Short-run Philips curve represents the inverse relationship between inflation and unemployment in the economy. When inflation increases, then unemployment decreases and vice versa. An increase in the aggregate demand increases the inflation rate and this in turn, reduces the unemployment rate in the economy.

Economics Concept Introduction

Philips curve: Philips curve shows the inverse relationship between unemployment and inflation rate in the economy.

Answer 6

Chapter 17, Problem 1SQP

To determine

Define the short-run Philips curve.

Expert Solution & Answer

Explanation of Solution

Short-run Philips curve represents the inverse relationship between inflation and unemployment in the economy. When inflation increases, then unemployment decreases and vice versa. An increase in the aggregate demand increases the inflation rate and this in turn, reduces the unemployment rate in the economy.

Economics Concept Introduction

Philips curve: Philips curve shows the inverse relationship between unemployment and inflation rate in the economy.

Answer 7

Chapter 17, Problem 1SQP

To determine

Define the short-run Philips curve.

Answer 8

Expert Solution & Answer

Explanation of Solution

Short-run Philips curve represents the inverse relationship between inflation and unemployment in the economy. When inflation increases, then unemployment decreases and vice versa. An increase in the aggregate demand increases the inflation rate and this in turn, reduces the unemployment rate in the economy.