The inflation-unemployment relationship The following graph shows the combinatio
ID: 1208220 • Letter: T
Question
The inflation-unemployment relationship
The following graph shows the combinations of unemployment and inflation that existed in the United States from 1961 through 1969.
cs Tutors I Chege × e The I Aplia: Student Question courses aplia.com/af servlet/quiz?cx-woroby-0041&quiz; action-takeQuiz8 quiz probGuid-Q4PLC0A801010000002e7ffb20050000&ck-21462122274765; 0AAA690D015283DD7CC4490B0000 The following graph shows the combinations of unemployment and inflation that ecisted in the United States from 1961 chrough 1969 5.0 4.0 3.5 3.0 1067 1985 20 1904 1.5 1963 1001 05 3.0 35 40 45 5.0 5.5 .0 85 7.0 Hint: Use the graph to answer the following questions. Click on any blue point (circle symbol) on the graph to ge its exact coord inares. which of the following statements about the raizonship between the unemployment and inflation datafor 1961-1969 is true? 0 There is positive relatonship between unemployment and inflation. O There is tradeof benween unemployment and inflation O The unemployment rate peaked t 3.5%. O A lower unemployment rate is associsted with a lower inflation rate The points on the graph represent observations along the U.S. economy's Phillips curve during the 1960s Use the black point (cross symbol) to hep you answer the questions that follow. (Note: You will not be graded for any adjustments made to the graph.) If the inflation rate had been 3.5% during the 1960s, the unemployment rate would most likely have been 0 6.5 O 3.7 0 4.5 decrease 5.0% Based on the graph, to reduce the unemployment rate from 5.5% to 4.5%, the inflation rate should Grade It Now Save & SA:02 1:21 PM 5/1/2016Explanation / Answer
1.
There is a tradeoff between unemployment and inflation
(since the curve is downward sloping, there exists a negative relationship between the two)
2.
3.7%
(It is the point of unemployment corresponding to an inflation rate of 3.5%)
3.
In order to reduce unemployment, inflation must increase by 0.6% (from 1.2% to 1.8%)
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