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Teaching Resources
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Cyberproblems & Solutions
The Short-run Tradeoff Between Inflation and
Unemployment
- Find the current misery index. Has the misery index increased
during the last four years? Use Economy at a Glance to
help you.
The unemployment rate and rate of increase of the CPI can be obtained directly.
The CPI increase is on a monthly basis. Students should be alerted that the
increase needs to be transformed into an annual basis.
- What is the current unemployment rate? Where do you judge it is
relative to Unemployment and Its Natural Rate? How expansionary
do you judge monetary policy to be? In your opinion, is monetary policy
appropriate given the current condition of the economy?
The unemployment rate can be found at Economy at a Glance. The Federal Reserve
sites listed in chapter 27 can be used to obtain information on interest rates
and monetary growth. This is not a simple question.
- What has happened to inflation and unemployment since President
Clinton took office? Is there still a Phillips curve? Why or why not?
The Economic Report of the President is a useful source of data.
The Table of Contents contains the statistical tables. Tables B-40 and B-58 have needed data. Students must
remember to transform Table B-58 CPI data into rate of change form.
- What do you think is meant by the term political business cycle? Investigate the timing of business cycle expansions and contractions over the last 25 years at the National Bureau of Economic Research. What is the relationship, if any, between the phases of the business cycle bear and the outcome of Presidential elections over the time period observed? World Media - Election History reviews previous presidential election outcomes. Would you conclude that there is a political business cycle in the United States?
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Investigate the relationship between inflation and unemployment in the
G-7 countries (U.S., Canada, France, Germany, Italy, Japan, United
Kingdom) over the past two years. Is falling unemployment associated
with rising inflation in all cases? Access International Economic
Trends
page at the St. Louis Federal Reserve Bank and find "Economic
Indicators" under "Comparative Economic Performance." The information
is available in both PDF and GIF formats. PDF is easier to read, but
you
must have installed Acrobat Reader, which can be downloaded for free
from Adobe.
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