Phillips Curve Cont & Inflation Rates(4/19-20)

Phillips Curve Cont... (4/19)

• if inflation persist and expected rate of inflation ↑, then the entire SRPC moves upward, which brings STAGFLATION

• stagflation - simultaneous rise in inflation and unemployment

• supply shock- rapid and significant ↑ in resource cost which cause SRAS to shift

• i.e. depreciation of $, oil embargo; if inflation expectation and due to new tech then SRPC will move downward

• NRU - Frictional, Seasonal, Structural, Cyclical

• Misery Index - combination of inflation and unemployment in any given yr

• Single-Digit Misery is good

Inflation

• inflation - PL↑ (natural rate - 2% to 3%)
• deflation - PL↓
• disinflation  - rate of inflation ↓
• hyperinflation - rate of inflation ↑