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    Phillips curve

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    I skipped a few beginning classes so I can't figure out how to do these beginning problems. Could you give some detailed hints for them?

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    1. A positive statement is a statement that states things as they are. For example, the sun rises from the east is a positive statement: it is not subject to interpretation (unless you say that east is not actually east!). A normative statement on the other hand, is a statement that speaks about how things should be. For example, is it fair that so many people in New York City are homeless when some of the residents of the city spend thousands in one night of partying: some people may say yes, some may say no, but it depends on your value judgements. In here you need to do the same thing.

    a. This is a fact. In the short run there is a trade-off between inflation and unemployment and it is called the Phillips curve. POSITIVE.
    b. Lower money growth will mean lower inflation. Another fact. POSITIVE.
    c. The Federal Reserve should reduce the growth of money. This will depend on the state of the economy. Bad idea in a recession. NORMATIVE.
    d. Should welfare recipients look for jobs? Depends on what their state of affairs is. Open to debate. NORMATIVE.
    e. Lower tax rates encourage more work and more savings. More work yes, but I am not convinced about more savings. NORMATIVE.

    2. It is given that the farmer takes 60 minutes to make one ounce of meat, and 15 minutes to make one ounce of potatoes. The rancher ...

    Solution Summary

    Phillips curve is assessed.