Unemployment and innation - rno of napuer rroolem -End The accompanying diagram shows the inflation rate in the United Kingdom from 1980 to the present. FRED-inflation, consumer prices for the United Kingdom 20.0 17.5 15.0 12.5 16.0 5.0 2.5 00 1985 Source World Bank Between 1980 and 1985, 1995 unemployment likely rose. O unemployment likely fell there is no way of determining how unemployment changed. 2005 Customize 1 Download Data LFRED-Economic Data from the St. Louis Fed a. Between 1980 and 1985, policymakers in the United Kingdom worked to lower the inflation rate. What would you predict happened to unemployment between 1980 and 1985? Inflation above 2% is harmful myfredigion 2015 b. Policy makers in the United Kingdom react forcefully when the inflation rate rises above a target rate of 2%. Why would it be harmful if inflation rose from 1.7% (the level in 2019) to, say, a level of 5%? O only if the inflation rate rises above the unemployment rate. because the cost of bringing it down is an unacceptable increase in unemployment. Obecause a 2% rate of inflation is consistent with the natural rate of unemployment, and if one rises, the other will too O only if the unemployment rate rises above the inflation rate.

Unemployment and innation - rno of napuer rroolem -End The accompanying diagram shows the inflation rate in the United Kingdom from 1980 to the present. FRED-inflation, consumer prices for the United Kingdom 20.0 17.5 15.0 12.5 16.0 5.0 2.5 00 1985 Source World Bank Between 1980 and 1985, 1995 unemployment likely rose. O unemployment likely fell there is no way of determining how unemployment changed. 2005 Customize 1 Download Data LFRED-Economic Data from the St. Louis Fed a. Between 1980 and 1985, policymakers in the United Kingdom worked to lower the inflation rate. What would you predict happened to unemployment between 1980 and 1985? Inflation above 2% is harmful myfredigion 2015 b. Policy makers in the United Kingdom react forcefully when the inflation rate rises above a target rate of 2%. Why would it be harmful if inflation rose from 1.7% (the level in 2019) to, say, a level of 5%? O only if the inflation rate rises above the unemployment rate. because the cost of bringing it down is an unacceptable increase in unemployment. Obecause a 2% rate of inflation is consistent with the natural rate of unemployment, and if one rises, the other will too O only if the unemployment rate rises above the inflation rate.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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