Phillips Curve Relationship
Not what you're looking for?
***THIS IS NOT A REQUEST FOR A WRITTEN PAPER, RATHER POINTS TO EXPOUND ON.***
Present a thorough analysis of the inverse relationship between inflation and unemployment reflected by the Phillips curve. Describe the importance of expectations and how they affect the actual relationship between the inflation rate and the unemployment rate. (one page)
Purchase this Solution
Solution Summary
This posting gives you a step-by-step explanation of the inverse relationship between inflation and unemployment. The response also contains the sources used.
Solution Preview
Step 1
Empirical data was studied and it showed that inflation and unemployment have a stable and inverse relationship. This theory was developed by A W Phillips and is called the Phillips curve. According to this theory with economic growth comes inflation, which in turn should lead to more jobs and less unemployment (a). The inverse relationship between unemployment and inflation is shown as a downward sloping concave curve. The x-axis shows unemployment and the y-axis shows inflation rate. Higher inflation on the Phillips curve leads to lower unemployment and lower inflation on the Phillips curve leads to higher unemployment. The ...
Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.