9 to 59 an increase of 20 while the rate of inflation measured by the change in

9 to 59 an increase of 20 while the rate of inflation

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the unemployment rate rose from 4.9% to 5.9% (an increase of 20%), while the rate of inflation measured by the change in the implicit price deflator barely changed from 5.3% to 5.2%. These ideas could be summarized using a Phillips curve, a new analytical device. It suggested that economists could lay out for policy makers a menu of possibilities. Policy makers could then choose the mix of inflation and unemployment they were willing to accept. Economists would then show them how to attain that mix with the appropriate fiscal and monetary policies
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2. The text notes that changes in oil prices can affect the inflation unemployment outcome. Explain what effect changes in oil prices may have on these two variables Rising oil prices tend to affect the overall consumer price index (CPI) directly by raising its energy cost component, which includes the prices of energy-related items, such as household fuels, motor fuels, gas, and electricity. The extent to which rising oil prices translate into higher overall inflation through higher energy costs depends on their persistence. If they
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