Assume that the federal government increases unemployment compensation, which of the following is the correct adjustment on the Phillips Curve Graph?

In 2009, Papua New Guinea had an estimated natural rate of unemployment equal to 4.7% and an actual unemployment rate equal to 4.3%.  What was the size of cyclical unemployment?

You might as well say that the unemployment rate would be zero if everyone just quit looking for work. Explain what the author means by this.

When you graph the Phillips curve, what goes on the y-axis? Change in inflation Rate of inflation Change in consumer price Change in short-run output

(f) Discuss the differences, and similarities if any, between the Phillips Curve and Okun's Law.

Suppose that the public expects that inflation will be high and that episodes of high unemployment are politically difficult for policymakers. Is it possible for the economy to be at a bad equilibrium as a result of people’s expectations of inflation (i.e. expectations trap)? Explain in terms of a Phillips Curve diagram.

True or false? According to the Phillips curve, in the long run there is a trade-off between inflation and unemployment

The Phillips curve in Lowland takes the form of π = 0.04 – 0.5 (u – 0.05), where π is the actual inflation rate and u is the unemployment rate. The Phillips curve in Highland takes the form of π = 0.08 – 0.5 (u – 0.05). The current unemployment rate in both countries is 9 percent (0.09). Explain the similarities in the Phillips curves in Highland and in Lowland.

Phelps was suspicious of the tradeoff suggested by the Phillips curve. He thought that sensible, forward-looking people should not change their behavior just because the prices on all the price tags in the economy increased at 4% per year instead of at 2% per year. Phelps started his analysis by asking what determines the unemployment rate. One of the key points he recognized was that unemployment is the inevitable consequence of an economy in which some firms go out of business each month and some workers quit their jobs each month. Once a worker is out of a job, the individual will take some time searching for the next one. Consider the following scenario. Picture an economy with 100,000 workers in its labor force. The unemployment rate is simply the number of unemployed workers divided by the number of workers in the labor force. At the beginning of January, the unemployment rate is 4.76%, so 4,760 people in the labor force are unemployed. Suppose that in January, 10% of the workers…

Based on your understanding of the Phillips curve, explain what happens to actual inflation (relative to expected inflation) when the actual unemployment rate is either above or below the natural rate of unemployment.