How can inflation and unemployment can be treated collectively?
Explain it as long as you can...
thanx
ahsan saleem
Answer:
Contrary to the previous responder, the Philips curve has not been refuted. It is alive and well.
Economists still believe that there is a negative relationship between inflation and unemployment. However, an important insight was gained in the 1980s and 1990s, when both unemployment and inflation rose. This insight is that expectations of the future are very important. If consumers and business start to believe that inflation will continue to be high, then that expectation becomes self-fulfilling. In essence, the Phillips curve gets shifted up.
However, this can also be reversed, as demonstrated by the tight monetary policies of Volcker and then Greenspan. Persistently tight monetary policy finally lowered expectations of high inflation, which shifted the Phillips curve back down.
job for all
Lower the minimum wage.
By creating new technology or anything that would lead to a positive shift in the Aggregate Supply curve.
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