Answer to Question #318348 in Macroeconomics for Varnika

Question

Draw the Philips Curve in 1980 with the economy facing stagflation, Label this point "A''

Show the short-run results of Chairman Volcker's leadership on the Philips curve, Label this point of short-run equilibrium point "B" and indicate new inflation and unemployment rate .

Answer 1

Inflation increases as the unemployment decreases.