1. Using the information in this chapter, label each of the following b. The ori

Question

1. Using the information in this chapter, label each of the following b. The original Phillips curve relation has proven to be very f. In the late 1960s, the economists Milton Friedman and statements true, false, or uncertain. Explain briefly stable across countries and over time Edmund Phelps said that policy makers could achieve as low a rate of unemployment as they wanted g. If people assume that inflation will be the same as last e year's inflation, the Phillips curve relation will be a relation between the change in the inflation rate and the unemploy- ment rate h. The natural rate of unemployment is constant over time within a country

Explanation / Answer

(b) True. Philips found the relation very stable for UK data and the data for US over a period of time gave promising results as well.

(f) False. They argued that the unemployment rate could not be sustained below a certain level; called the natural rate of unemployment.

(g)False, as the change in inflation rate depends on the difference between the actual and the natural unemployment rates.

(h) Uncertain. A number of macro economic factors are taken into account to compute this which cannot be stable as the variables are dynamic in nature.

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