Discuss The Following Statements The Phillips Curve Implies That When Unemployme

2. Discuss the following statements.

a. The Phillips curve implies that when unemployment is high, inflation is low, and vice versa. Therefore, we may experience either high inflation or high unemployment, but we will never experience both together.

b. As long as we do not mind having high inflation, we can achieve as low a level of unemployment as we want. All we have to do is increase the demand for goods and services by using, for example, expansionary fiscal policy.

c. In periods of deflation, workers resist reductions in their nominal wages in spite of the fact prices are falling.

Prof. Angela


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