The Short-Run Trade-off between Inflation and Unem loyment
PROBLEMS AND APPUCATIONS 1. Suppose the natural rate of unemployment is 6 percent. On one graph, draw two Phillips curves that describe the four situations listed here. Label the point that shows the position of the economy in each case. a. Actual inflation is 5...
The Short-Run Trade-off between Inflation and Unem loyment
QUESTIONS FOR REVIEW 1.’ Draw the short-sun trade-off between inflation and unemployment. How might the Fed move the economy from one point on this curve to another? 2. Draw the long-run trade-off between inflation and unemployment. Explain how the short-run and...
The Short-Run Trade-off between Inflation and Unem loyment
CONCLUSION This chapter has examined how economists’ thinking about inflation and unemployment has evolved. We have discussed the ideas of many of the best economists of the 20th century: from the Phillips curve of Phillips, Samuelson, and Solow, to the...
The Short-Run Trade-off between Inflation and Unem loyment
CASE STUDY WHY WERE INFLATION AND UNEMPLOYMENT 50 LOW AT THE END OF THE 19905? As the 20th century drew to a close, the U.S. economy was experiencing some of the lowest rates of inflation and unemployment in many years. In 1999, for instance, unemployment had fallen...
The Short-Run Trade-off between Inflation and Unem loyment
In The News The Case for Inflation Targeting As this book was going to press,Alan Greenspan’s tenure as Fed chairman was coming to a dose. This Artie, three economists offer his successor some advice. In October 2005, President Bush nominated Greenspan’s...
The Short-Run Trade-off between Inflation and Unem loyment
THE GREENSPAN ERA Since the OPEC inflation of the 1970s and the Volcker disinflation of the 1980s, the U.S. economy has experienced relatively mild fluctuations in inflation and unemployment. Figure 12 shows inflation. Figure 12 The Greenspan Era This figure shows...
