Date post: | 15-Jul-2015 |
Category: |
Economy & Finance |
Upload: | gale-pooley |
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George Akerlof(1940 - )
Nobel Prize 2001
"Probably the single most important
macroeconomic relationship is
the Phillips curve."
InflationRate
Unemployment Rate4% 7%
6%
2%
Phillips Curve
TradeoffHigh Inflation and Low UnemploymentLow Inflation and High Unemployment
InflationRate
Unemployment Rate
Phillips -Friedman Curves
Short-Run
Long-Run
No relationshipbecause LRAS is vertical
PriceLevel
Quantity of Output
P1
AD- AS Model
Aggregate Demand
Short RunAggregateSupply
Y1 Y2
P2
Long RunAggregateSupply
P3
Natural Rate Hypothesis
The claim that unemployment returns to its normal, or natural rate regardless of the rate of
inflation
Disinflationreduction in the rate of inflation - slows down
Deflationreduction in the price level
go in reverse