Mod 34_ Inflation and Unemployment Through The Phillips Curve.docx

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Justin Sousa1December 5, 2016Mod 34: Inflation and Unemployment Through The Phillips CurveThe Short-Run Phillips Curve-There is a short-run trade-off between unemployment and inflation–lower unemploymenttends to lead to higher inflation, and vice versa-This is caused by wages increasing during low unemployment and decreasingduring high unemployment-Theshort-run Phillips Curve (SRPC) illustrates the negative relationship between theunemployment rate and the inflation rate-A negative supply shock causes the SRPC to rise because the inflation rate increases forevery level of unemployment rate-Economists also began accepting the expected inflation rate, the rate of inflation thatemployers and workers expect in the near future
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Term
Fall
Professor
Mr. Rea
Tags
Inflation, Phillips Curve, Unemployment, short run Phillips curve

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