Answer the given question with a proper explanation and step-by-step solution. 6. The short-run inflation-unemployment trade-offThe following graph shows the combinations of unemployment and inflation that existed in the United States from 1961 through 1969.INFLATION RATE (Percent)5.04.54.03.53.02.52.01.51.00.503.03.5696867664.065+64 62634.55.0 5.56.0UNEMPLOYMENT RATE (Percent)+6.5617.0? Hint: Use the graph to answer the following questions. Select any black point (plus symbol) on the graph to get its exact coordinates.What happened to the inflation rate between the year when the unemployment rate was 5.5% and the year when it was 4.5%?The inflation rate increased from 4% to 5%.The inflation rate decreased by 2 percentage points.The inflation rate increased by 0.5 percentage points.The inflation rate decreased from 1.9% to 1.5%.The points on the graph represent observations along the U.S. economy's Phillips curve during the 1960s. If the inflation rate had been 3.5% duringthe 1960s, the unemployment rate would most likely have been:3.7%O 5.0%○ 2.8%O 6.5%Credo It NowSove & Continue

According to the Phillips curve there is an inverse relationship berween inflation and unemployment.…

6. The short-run inflation-unemployment trade-off The following graph shows the combinations of unemployment and inflation that existed in the United States from 1961 through 1969. INFLATION RATE (Percent) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 3.0 3.5 69 68 67 +66 + 4.0 65 64 62 63 4.5 5.0 5.5 6.0 UNEMPLOYMENT RATE (Percent) + 6.5 61 7.0 ?

6. The short-run inflation-unemployment trade-off The following graph shows the combinations of unemployment and inflation that existed in the United States from 1961 through 1969. INFLATION RATE (Percent) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 3.0 3.5 69 68 67 +66 + 4.0 65 64 62 63 4.5 5.0 5.5 6.0 UNEMPLOYMENT RATE (Percent) + 6.5 61 7.0 ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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