Do you think the Phillips curve is a useful tool for analyzing the economy today? Why...

Do you think the Phillips curve is a useful tool for analyzing the economy today? Why or why not?

What is the government’s key priority these days- fight unemployment or fight inflation? Give your opinion from a personal level.

Expert Solution

1 - Yes , the Philips curve can be a tool to analyze the economy . The philips curve shows the relationship between the rate of inflation and unemployment. This curve denotes the inverse relation between the rate of inflation and the unemployment. At the present time , the inflation rates are very very low and the unemployment rates are very high due to the loss of jobs in pandemic . This condition can be depicted using the philips curve. Hence , yes philips curve can be a tool for analyzing the economy today.

2 - In the current global pandemic phase , the goal of the government is to fight the unemployment because the economy is not into inflationary phase , but the level of unemployment is very high due to the stoppage on the production in the economy . The economy is suffering from recession . The goal is to reduce the rate of unemployment, increase the production and hence AD. This will take the economy out of recession.

Rahul Sunny answered 2 years ago

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