Explain the concept of philips curve. Discuss how aggregate supply and philips curve are related to...

Explain the concept of philips curve. Discuss how aggregate supply and philips curve are related to each other?

Solutions

Expert Solution

Concept of Philip Curve:

Philip Curve explain the relationship between inflation and unemployment. Philip Curve is an economic term which has been explained by A.W. Philips. Philip Curve theory explain about the economic growth, inflation, unemployment. It states that inflation comes hand in hand with economic growth which should have to create more job and less unemployment.

Philip Curve states that change in unemployment have the predictable effect on inflation. Unemployment and inflation has inverse relationship between them and it is being shown via downward sloping concave curve. This curve has inflation on it Y-axis and on X -axis unemployment. Theory of Philip curve state that higher the inflation in economy, unemployment will be lower compared to inflation.

- Aggregate supply explain the short run relationship between price level and employment where price level rise will increases the employment. While Philip curve states the relationship between inflation and unemployment.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Explain how each of the following affects the aggregate supply and/or aggregate demand curve and equilibrium...

Explain how each of the following affects the aggregate supply and/or aggregate demand curve and equilibrium GDP and prices in the short and long run. Does your answer depend on where the economy is in terms of full employment when the change happens? Consumer spending increases Investment spending increases Government spending is reduced US exports fall Tax rates are lowered Raw material (e.g., energy) prices rise Wages increase

a) Explain the relationship between unemployment and inflation using the concept of Philips curve. What are...

a) Explain the relationship between unemployment and inflation using the concept of Philips curve. What are the critics on Philips Curve? b) Use the Phillips Curve to explain policy responses to a supply shock caused by increase in the world price of oil c) Discuss Walras's Law statement that the sum of the nominal excess demands for all goods in the economy must be zero.

Use equations to show how the Short Run Aggregate Supply Curve is related to the short...

Use equations to show how the Short Run Aggregate Supply Curve is related to the short run Phillips Curve.

What makes the aggregate supply curve shift and how does a shift in the aggregate supply...

What makes the aggregate supply curve shift and how does a shift in the aggregate supply curve help expand the economy?

(Explain what happens to the position of the nation's aggregate demand or aggregate supply curve, the...

(Explain what happens to the position of the nation's aggregate demand or aggregate supply curve, the short-run level of equilibrium output, and the nation’s price level if: (a) Consumer confidence increases. (b) Stock prices decline 40 percent. (c) Oil prices drop to $12 per barrel. (d) The central bank sharply increases interest rates. (e) Government increases the minimum wage). (Hint: Example: AS shifts to the right, RGDP declines, P increases) Maximum size for new files: 8MB

Graphically illustrate the long-run aggregate supply curve. Explain how you derive this curve with at least...

Graphically illustrate the long-run aggregate supply curve. Explain how you derive this curve with at least 200 words. Note:please explain in detail and please don't write HANDWRITING because I don t understand your HANDWRITING ITS my book : Principles of Economics (12th Edition)

Question