Macro Unit 3 3.5- The Phillips Curve Part 1 - Check Your Understanding- Use the information in the graphs below to answer the questions. Consumer Price Index: Percent Change from a Year Ago 1976-1986 FRED - Consumer Price Index for All Urban Consumers: All Items 15.0 125 10.0 Percent Change from Year Ago 7.5 5.0 2.5 0.0 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 The Civilian Unemployment Rate 1976-1986 FRED - Civilian Unemployment Rate 10.0 9.5 9.0 8.5 8.0 Percent 7. 7.0 6.5 6.0 5.5 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1. Under normal economic conditions, the short-run Phillips curve suggests a specific relationship between inflation and unemployment. Identify which years represent the longest period of time between 1976 and 1986 in which this relationship held true. Explain your answer. Video Help- https://goo.gl/Tt68kyMacro Unit 3 3.5- The Phillips Curve 2. Identify a year that clearly represents the idea of stagflation. Explain your answer using data from the graphs. 3. In the early 1980s, economists enacted policies to fight stagflation. Were those policies successful after 1983? Explain your answer using data from the graphs. 4. Given only the information in these two graphs, which year between 1976 and 1986 would you most want to live in. Explain your reasoning. Part 2 - Draw It- 12% 5. Create a short-run phillips curve for the years 1976-1979. Plot and label each year, connect the points, and label the Inflation Rate 10% line SRPC,. 8% 6. Draw a seperate short-run phillips curve for the years 1980-1982. Plot and label each year, connect the points, and label 6% the line SRPC2. 7. Give an example of a specific event that 4% could explain why SRPC , shifted to SRPC2. 2% 6% 7% 8% 9% Unemployment Rate Video Help- https://goo.gl/Tt68ky