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business cycles - Cloudfront.net
business cycles - Cloudfront.net

... • The unemployment rate shows the percentage of unemployed people divided by the total number of people in the civilian labor force.  • The unemployment rate understates unemployment because it does not include “discouraged” workers or people who are working part-time because they cannot find full- ...
consumer price index
consumer price index

... The GDP Deflator versus the Consumer Price Index • The consumer price index compares the price of a fixed basket of goods and services to the price of the basket in the base year (only occasionally does the BLS change the basket)... • …whereas the GDP deflator compares the price of currently produc ...
Wealth Effect and Nominal Interest Rates
Wealth Effect and Nominal Interest Rates

... 1. Introduction and Summary The goal of this short paper is to use an explicit optimization in order to derive the consumption function and the IS relationship with a wealth effect. This derivation is then used as a possible explanation of the puzzle of interest rate smoothing. Another natural appl ...
Institutional Factors in Domestic Inflation
Institutional Factors in Domestic Inflation

Inflation Tutorial
Inflation Tutorial

... When it comes to inflation, the question on many investors' minds is: "How will it affect my investments?" This is an especially important issue for people living on a fixed income, such as retirees. The impact of inflation on your portfolio depends on the type of securities you hold. If you invest ...
View/Open - RIT Digital Archive
View/Open - RIT Digital Archive

... another economic problem arrived, high unemployment and a recession (B. Kaufman and S. Kaufman 221). In fighting inflation, some of the administrations policies, like tightening credit, had worked a little to well as the second quarter of 1980 saw the steepest drop in GNP American history (Schulman ...
Chapter 14
Chapter 14

Chapter 10 - The Citadel
Chapter 10 - The Citadel

...  The deflation observed in the U.S. in the 1930’s was the result of a leftward shift of LRAS.  The recent deflation in Japan and China occurred with increases in real output, suggesting that it resulted from an increase in LRAS along with a stable aggregate demand. Slide 10-45 ...
AP Week 9 ADAS - Ector County ISD.
AP Week 9 ADAS - Ector County ISD.

macroeconomic outcomes of changing bargaining
macroeconomic outcomes of changing bargaining

... policies that rise the wage share and maintain a balanced trade even for exportled economies. We then discuss the relevance of income policies and suggest that profit share flexibility encounters the same kind of political opposition as that used against permanent full employment described by Kaleck ...
Econ161SQ8(Money and Inflation)
Econ161SQ8(Money and Inflation)

... 1. The value of money = 1/P where P is the price level. To understand this, imagine that there was one good in the economy, say, widgets. The price level would then simply be the money price of widgets. For example, suppose P = $0.50/ widget. Then 1/P = 1/0.5 = 2. What does this number tell us? It t ...
Working with our basic Aggregate Demand / Supply Model
Working with our basic Aggregate Demand / Supply Model

CH_15_13th
CH_15_13th

... will influence both output and employment. • When inflation is greater than anticipated, profit margins will improve, output will expand, and unemployment will fall below its natural rate. • Alternatively, when the actual rate of inflation is less than the expected rate, profits will be abnormally l ...
A Dynamic Model of Aggregate Demand and Aggregate Supply
A Dynamic Model of Aggregate Demand and Aggregate Supply

... Suppose that the aggregate supply shock variable t increases to 1 percent for one period of time and then returns to zero. The DAS curve will shift to the left in period t by exactly the amount of the shock. The DAD curve will remain unchanged. Inflation rises and output falls in period t. These ef ...
eco 155 750 lecture twenty-three 1 okay. we`re getting to go on and
eco 155 750 lecture twenty-three 1 okay. we`re getting to go on and

... CURVE HERE. IF THERE'S AN INCREASE IN AGGREGATE DEMAND OR AGGREGATE SPENDING, THEN WHAT WE NOTICE IS -- I'LL LABEL THIS. THEN WHAT WE NOTICE IS THAT WE GET AN INCREASE IN PRODUCTION BUT WE ALSO GET A LITTLE BIT OF INFLATION. SO THAT SPENDING GETS DISTRIBUTED IN TWO DIFFERENT WAYS. ONE IS, WE'RE HIRI ...
chapter 6 - McGraw
chapter 6 - McGraw

... THE DYNAMIC RETURN TO LONG-RUN AGGREGATE SUPPLY. ...
A Primer on Inflation
A Primer on Inflation

... “Falling prices or price deflation are not the cause of economic and financial crises, but their consequence and simultaneously their cure” Roland Baader The “deflation specter”, the great “deflation trap” as well as the “catastrophic deflation spiral” have recently been ubiquitous in the media, the ...
Chapter 23 Aggregate Supply and Demand and the Growth Diamond
Chapter 23 Aggregate Supply and Demand and the Growth Diamond

... output by shifting AD to the right: the AS curve will soon shift left, leaving the economy with a higher price level but the same level of output. Similarly, policymakers need do nothing in response to a negative supply shock1 (which, as noted above, shifts AS to the left) because the AS curve will ...
Does the Yield Curve Signal Recession?
Does the Yield Curve Signal Recession?

... funds rate.” That is, when the real federal funds rate—the target rate set by the FOMC, adjusted for inflation—is high relative to its long-run level, the chance of a recession increases. While Greenspan does not cite the statistical analysis he refers to, there is some evidence that movements in s ...
Ch 29
Ch 29

... A. an inflationary; the AS curve shifts leftward as the money wage rate rises B. an inflationary; the AD curve shifts leftward as prices rise C. an inflationary; potential GDP increases to close the gap D. a recessionary; the AS curve shifts leftward as the money wage rate falls E. a recessionary; t ...
Chapter X: template (1 - The Good, the Bad and the Economist
Chapter X: template (1 - The Good, the Bad and the Economist

... addition to this, workers in weak positions will not be able to bid up wages as much as workers in strong bargaining positions. (See “In real life…”story further on.) Two other groups which stand to lose real income due to inflation are lenders and savers. Inflation has the tendency to decrease the ...
Kent Academic Repository
Kent Academic Repository

... to inflation without the government and its central bank cooperating in increasing the money supply. The argument is that if the money supply is constant, increases in the cost of a good or a service will decrease the money available for other goods and services, and therefore the price of some thos ...
True, False, or Uncertain? Explain with words and graphs Study
True, False, or Uncertain? Explain with words and graphs Study

21.1 labor market indicators
21.1 labor market indicators

... Part-Time Workers Part-time work is attractive to workers because they: • Balance family with work Part-time work is attractive to employers because: • Benefits are not paid to part-time workers • Less government regulation of part-time workers ...
19. GDP is
19. GDP is

... dollar of income will buy fewer goods than before. ...
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Phillips curve



In economics, the Phillips curve is a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result in an economy. Stated simply, decreased unemployment, (i.e., increased levels of employment) in an economy will correlate with higher rates of inflation.While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run. In 1968, Milton Friedman asserted that the Phillips Curve was only applicable in the short-run and that in the long-run, inflationary policies will not decrease unemployment. Friedman then correctly predicted that, in the upcoming years after 1968, both inflation and unemployment would increase. The long-run Phillips Curve is now seen as a vertical line at the natural rate of unemployment, where the rate of inflation has no effect on unemployment. Accordingly, the Phillips curve is now seen as too simplistic, with the unemployment rate supplanted by more accurate predictors of inflation based on velocity of money supply measures such as the MZM (""money zero maturity"") velocity, which is affected by unemployment in the short but not the long term.
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