RQch16 - Ch 16 1.6 a. Point B on the Phillips curve graph...

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Ch 16 1.6 a. Point B on the Phillips curve graph represents the same economic situation as point B on the aggregate demand and aggregate supply graph, because the smaller increase in aggregate demand results in an inflation rate of 3 percent, a lower level of real GDP (compared with point C ). b. Point A on the Phillips curve graph represents the same economic situation as point C on the aggregate demand and aggregate supply graph, because the larger increase in aggregate demand results in an inflation rate of 6 percent, a higher level of real GDP (compared with point B ), and a lower level of unemployment. 1.9 In the 1960s the Phillips curve was widely viewed as a stable (structural) relationship representing a policy menu of choices between low inflation and high unemployment, and high inflation and low unemployment. Today, the Phillips curve is not viewed as a policy menu as the structural relationship had been broken off and in the long run there is no tradeoff between inflation and unemployment.
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This note was uploaded on 04/22/2010 for the course ECONOMICS ECON1002 taught by Professor None during the Spring '10 term at Hong Kong Institute of Vocational Education.

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RQch16 - Ch 16 1.6 a. Point B on the Phillips curve graph...

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