How to illustrate the effect of a rise in the natural rate of unemployment on both the short-run and the long-run Phillips curve?
What is the effect of a rise in the natural rate of unemployment on the Phillips curve?car loan
in the short run, as unemployment increases, inflation decreases too, as simple as that, it is a movement along the curve.
on the long run philips curve, there is no trade-off between inflation and unemployment. this is because the long run was suggested after the short run PC was disproved, and it is a vertical straight line on the graph.
note that the natural rate hypothesis states attempts to reduce the NATURAL rate of unemployment will result in ever increasing inflation.
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