True or False? Explain: If we look at annual observations of any four or five consecutive years, the?

True or False? Explain: If we look at annual observations of any four or five consecutive years, the


inflation rate will be negatively related to the unemployment rate.True or False? Explain: If we look at annual observations of any four or five consecutive years, the?
Actually it is generally true. The Phillips Curve shows the short run trade off between inflation and unemployment, the higher the one the lower the other.True or False? Explain: If we look at annual observations of any four or five consecutive years, the?
In theory, true.


In practice, you may not find a relationship based on five observations.





Also, the Phillips curve is not technically based on the relationship between inflation rate and unemployment, but rather on that between the rate of change in price of imported goods and the rate of change in unemployment.





So, what you're taught in intermediate econ is:





In = f(Un)





While Phillips argued in his classic paper:





In - In-1 = f(Un - Un-1)





Essentially.





So for your test, it's true. In reality you wont' necessarily see it.
false.
false

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