The Philips Curve in the Ten Principles video, Dr. Todd Buchholz and Dr. Caroline Hoxby debated the very existence of the Phillips Curve. Dr. Hoxby indicated she was taking bets that the Phillips Curve is alive and well. The problem may be that it moves around and possibly changes shape occasionally. Policy makers like Congress and the Federal Reserve seek to steer the U.S. economy to a sweet spot where we have low unemployment and only moderate inflation. The Phillips Curve is supposed to describe the trade-off between inflation and unemployment. Does it?

Read the Business Insider article: Japan can help us better understand one of the biggest puzzles facing the US economy.

Using data from the Bureau of Labor Statistics, what is the current level of unemployment? Be sure to include the link to where you have found your information.

2. Using data from the Bureau of Labor Statistics, what is the current level of inflation? Be sure to include the link to where you have found your information.

3. Are these high or low compared to historical averages in the United States?

4. Should policy makers ignore the ‘historically observed Phillips Curve relationship’ and push unemployment even lower? Explain your thoughts

Answer rating: 100% (QA)

Analysis of the Description made by the Philips Curve in terms of the tradeoff between inflation and unemployment The Philips curve reveals the tradeoff that exists between the rate of inflation and t... View the full answer