Author Question: Can an economy maintain high output growth, low unemployment, and low inflation at the the same ... (Read 93 times)

KimWrice · **on:** Jun 30, 2018

Can an economy maintain high output growth, low unemployment, and low inflation at the the same time? Explain.

What will be an ideal response?

Question 2

Explain why the Phillips curve on average is downward sloping.

What will be an ideal response?

carojassy25 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

It would be very hard to achieve the three objectives at the same time. High output growth leads to low unemployment, which is likely to put pressure on inflation.

Answer to Question 2

When unemployment becomes very low, the economy is likely to overheat and this will lead to upward pressure on inflation.