the phillips curve n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
The Phillips Curve PowerPoint Presentation
Download Presentation
The Phillips Curve

Loading in 2 Seconds...

play fullscreen
1 / 8

The Phillips Curve - PowerPoint PPT Presentation


  • 92 Views
  • Uploaded on

The Phillips Curve. A.P. Macroeconomics Ms. McRoy. “Aim”. What is the trade-off between inflation and unemployment in the short-run? In the long-run?. “Do-Now”. LRAS. SRAS. Aggregate Price Level.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'The Phillips Curve' - mia-saunders


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
the phillips curve

The Phillips Curve

A.P. Macroeconomics

Ms. McRoy

slide2
“Aim”
  • What is the trade-off between inflation and unemployment in the short-run? In the long-run?
do now
“Do-Now”

LRAS

SRAS

Aggregate Price Level

  • Imagine that the economy is operating at E1, but then begins to slide into a recession as a result of decreased consumer confidence.
    • Graph the effect of this change.
    • What is the effect on unemployment?
    • What is the effect on aggregate price level?

PE

E1

AD

YE

Real GDP (Y)

building the short run phillips curve
Building the Short-run Phillips Curve

Price Level

LRAS

Inflation Rate

SRAS

P2

E3

P2

c

PE

PE

E1

a

P1

b

P1

E2

AD2

AD

SRPC

AD1

Q2

Y

Q1

u3

u1

u2

QR

Qf

QI

Unemployment Rate

building the short run phillips curve1
Building the Short-run Phillips Curve

Price Level

LRAS

Inflation Rate

SRAS2

SRAS

SRAS1

P2

E3

P2

c

PE

PE

E1

a

P1

E2

P1

b

SRPC2

AD

SRPC

SRPC1

Q2

Q1

Y

u1

u2

u3

QR

Qf

QI

Unemployment Rate

the long run phillips curve
The Long-run Phillips Curve

Phillips Curve

Inflation Rate

LRPC

Suppose now, that the government passes an expansionary fiscal policy…

What happens to unemployment and inflation?

b

c

2%

a

0%

Unemployment Rate

5%

3%

SRPC1

NAIRU

SRPC0

nairu
NAIRU
  • Proposed by Milton Friedman (Monetarist)
  • The non-accelerating inflation rate of unemployment (NAIRU) – the unemployment rate at which inflation does not change over time.
    • Keeping unemployment below NAIRU leads to accelerating inflation and cannot be maintained.
    • Keeping unemployment above NAIRU leads to decelerating inflation.
slide8
“Aim”

What is the trade-off between inflation and unemployment in the short-run? In the long-run?