Homework: Principles of Macroeconomics
The Short-Run and Long-Run Relationship Between Unemployment and Inflation.
Unemployment and inflation are an economy's two most important macroeconomic issues. The federal government's fiscal policy and the Federal Reserve's monetary policy try to maintain both a low unemployment rate around a natural rate and a low inflation rate around 2%.
In your Paper,
i. Evaluate the historical relationship between unemployment and inflation. (hint: You may start from A.W. Phillips's finding of the relationship between unemployment and inflation.)
ii. Distinguish between the short-run and the long-run in a macroeconomic analysis. Why is the relationship between unemployment and inflation different in the short-run and the long-run?
iii. Assess the recent 20-year U.S. unemployment and inflation data. Do the current U.S. unemployment and inflation data confirm the short-run Phillips curve?
iv. Analyze why the recent 20-year U.S. unemployment and inflation data approves or disproves the short-run Phillips curve.
v. Evaluate whether the Phillips curve can still validly resolve today's issue of unemployment and inflation and forecast unemployment and inflation. Why or why not?
vi. Recommend any policy, method, or opinions for the current U.S. unemployment and inflation as a policy maker for either fiscal policy or monetary policy (or both).
Format your homework according to the following formatting requirements:
i) The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
ii) The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
iii) Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.