Asked by Hikkmatjit Saini on May 04, 2024
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Suppose that businesses become less optimistic about the future. Assuming no change in inflation expectations, how would the effects of this shock be shown on the Phillips curve diagram and what would happen to inflation and unemployment?
Less Optimistic
Feeling or expressing a lower expectation that good events will occur or that negative events will not happen.
Phillips Curve Diagram
A graphical representation showing the inverse relationship between the rate of inflation and the rate of unemployment in an economy over time.
Inflation And Unemployment
The relationship explored in economics that examines how changes in the inflation rate can affect unemployment levels, often discussed in the context of the Phillips curve.
- Acquire knowledge on the Phillips curve theory in the context of short-run and long-run periods.
- Evaluate the role of consumer sentiment and asset prices in impacting inflation and levels of unemployment.
- Acquire knowledge on how expectations of inflation affect the outcomes of economic strategies.
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Learning Objectives
- Acquire knowledge on the Phillips curve theory in the context of short-run and long-run periods.
- Evaluate the role of consumer sentiment and asset prices in impacting inflation and levels of unemployment.
- Acquire knowledge on how expectations of inflation affect the outcomes of economic strategies.
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