Economics Principles For A Changing World
Economics Principles For A Changing World
4th Edition
ISBN: 9781464186660
Author: CHIANG, Eric P.
Publisher: Worth Publishers,
Question
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Chapter 25, Problem 1QP
To determine

Explain the steeper Phillips curve when unemployment rate is low.

Expert Solution & Answer
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Explanation of Solution

If the economy has lot of slacks, the unemployment exceeds by 6%, and the economy can expand with little pressure on prices. Thus, the economy approaches full employment or unemployment rate below 4%. Then, the labor and other markets constrict and the price increases rapidly.

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