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Chapter 8
Inflation:
Its Causes
and Cures
Copyright © 2006 Pearson Addison-Wesley. All rights reserved.
Figure 8-1 The Inflation Rate and the
Output Ratio, 1960–2004
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Figure 8-2 Relationship of the
Short-Run Aggregate Supply (SAS) Curve to
the Short-Run Phillips (SP) Curve
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Figure 8-3 Effect on the Short-Run Phillips
Curve of an Increase in the Expected Inflation
Rate (pe) from Zero to 3 Percent
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Table 8-1 Alternative Divisions of 6 Percent
Nominal GDP Growth Between Inflation and
Real GDP Growth
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Figure 8-4 The Adjustment Path of Inflation and the
Output Ratio to an Acceleration of Nominal GDP Growth
from Zero to 6 Percent When Expectations Fail to Adjust
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Figure 8-5 Effect on Inflation and Real GDP
of an Acceleration of Demand Growth from
Zero to 6 Percent
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Figure 8-6 Initial Effect on Inflation and Real
GDP of a Slowdown in Nominal GDP Growth
from 10 Percent to 4 Percent
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Figure 8-7 Adjustment Path of Inflation and Real GDP
to a Policy That Cuts Nominal GDP Growth from 10
Percent in 1980 to 4 Percent in 1981 and Thereafter
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International Perspective Did Disinflation in
Europe Differ from That in the United States?
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Figure 8-8 The Inflation Rate and the
Output Ratio, 1980–95
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Figure 8-9 Four-Quarter Growth Rate of the
GDP Deflator and the Level of Nominal and
Real Oil Prices, 1970–2004
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Figure 8-10 The Effect on the Inflation Rate and the
Output Ratio of an Adverse Supply Shock That Shifts
the SP Curve Upward by 3 Percent
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Figure 8-11
Effect of Adverse Supply Shocks in the 1970s
and Beneficial Supply Shocks in the 1990s
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Figure 8-12 Responses of the Inflation Rate (p)
and the Output Ratio (Y/YN) to Shifts in Nominal
GDP Growth and in the SP Curve (1 of 2)
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Figure 8-12 Responses of the Inflation Rate (p)
and the Output Ratio (Y/YN) to Shifts in Nominal
GDP Growth and in the SP Curve (2 of 2)
Copyright © 2006 Pearson Addison-Wesley. All rights reserved.
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Figure 8-12
Responses of
the Inflation
Rate (p) and
the Output
Ratio (Y/YN) to
Shifts in
Nominal GDP
Growth and in
the SP Curve
Copyright © 2006 Pearson Addison-Wesley. All rights reserved.
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Figure 8-13
The U.S. Ratio of Actual to Natural Real GDP
(Y/YN) and the Unemployment Rate, 1965–2004
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Figure 8-14 The Unemployment Rate
and the Inflation Rate, 1960–2004
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Figure 8-15
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Figure 8-16
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