Reference no: EM132550801
On 22 February 2019 Philip Lowe, the Governor of the Reserve Bank of Australia, told the house economics committee:
"I think this country can have an unemployment rate close to 4.5 per cent [as opposed to the commonly assumed 5, or 5.5 per cent] without wage growth causing problems for inflation."
Shortly after, journalist A suggested this is good news for the government. In contrast, two days later, another journalist, journalist B, argued the opposite, that this is bad news for the government, citing the high rate of underemployment in Australia.
a) Which well-known macroeconomic concept is Governor Lowe referring to and what is it called?
b) What arguments would support the two journalists' assessments, respectively? Briefly explain.
c) Briefly explain some of the key characteristics that make the labour market different from, say, the market for chocolate bars?
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