Answer to Question #313119 in Macroeconomics for Annie

Question

In today’s economy, it’s harder for workers to get promoted. In 2006, it took an average

of 2 ½ years to get a promotion; today it takes 4 ½ years. As a result, fewer workers are willing

to boost their productivity in an effort to impress the boss and get the promotion. In 2006, 25

percent of employees said they were willing to give “an extra oomph” at work (boost their

productivity); today about 15 percent are willing to do so. Explain the connection to the Phillips

curve.

Answer 1

Solution

Phillips curve is a graph that shows the inverse relationship between the rate of unemployment and the rate of inflation in an economy.

The Phillips curve relates the rate of inflation with the rate of unemployment. It argues that unemployment and inflation are inversely related: as levels of unemployment decrease, inflation increases. Graphically, the short-run Phillips curve traces an L-shape when the unemployment rate is on the x-axis and the inflation rate is on the y-axis.

it took an average of 2 ½ years to get a promotion this is because we had a decrease in unemployment rates therefore an increase in inflation rate leading to a promotion which means an increase in wage bill and salaries of workers while today an increase in unemployment has led to more decrease in inflation therefore increase to more time for one to get a promotion to about 4 ½ years.