Ch8.2 - DEFLATION AND THE PHILLIPS CURVE RELATION 60 Fig...

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D EFLATION AND THE PHILLIPS CURVE RELATION 0 60 Fig 8.1 Inflation versus Unemployment in the US, 1900- 1960
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D EFLATION AND THE PHILLIPS CURVE RELATION | What relationship between unemployment and inflation do the triangles (Great Depression in the 1930s) indicate in Fig 8-1? | Some triangles show that high unemployment rate was associated with high inflation rate. ± These results are not consistent with the predictions proposed by the modified PC. It says that given the very high unemployment te the inflation rate could be negative (i e rate, the inflation rate could be negative (i.e., deflation). 1 61
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EFLATION AND THE PHILLIPS CURVE RELATION | How do we interpret that fact? | Actual unemployment rate increasesd, and nuatural unemployment rate increased as well. ± This explanation is rejected by most economic historicans. ± They found that there was a large adverse shift in AD leading to an increase in the actual unemployment rate rather than an increase in the natural unemployment rate. 2
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Ch8.2 - DEFLATION AND THE PHILLIPS CURVE RELATION 60 Fig...

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