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Author Question: If the rate of inflation in the economy is steady at 5 percent per year, how does the short-run ... (Read 86 times)

nautica902

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Question 1

If the unemployment rate in the economy is steady at 4 percent per year, how does the short-run Phillips curve predict that the inflation rate will be changing, if at all? What will happen if the unemployment rate now rises to 7 percent per year? Assume there are no changes to inflation expectations. Provide an appropriate graph to support your discussion.



Question 2

If the rate of inflation in the economy is steady at 5 percent per year, how does the short-run Phillips curve predict that the unemployment rate will be changing, if at all? Does your answer change if inflation in the economy is 0 percent? Illustrate your answer with a Phillips curve.



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Marked as best answer by nautica902 on Mar 16, 2019

matt95

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nautica902

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Reply 2 on: Mar 16, 2019
YES! Correct, THANKS for helping me on my review


laurnthompson

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Reply 3 on: Yesterday
Wow, this really help

 

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