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What factors accounted for the additional inflation

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Reference no: EM131737393

Question: The annual data for the US economy in the 1960s are given below

117_Data.png

(A) Show these data graphically.

(B) From 1966 through 1969, the unemployment rate was virtually unchanged, yet the inflation rate rose almost 3%. Why did it rise that much?

(C) In 1974, the unemployment rate was 5.6%. What would have been the projected inflation rate using the Phillips curve based on these data alone? The actual inflation rate that year was 11.0%. What factors accounted for the additional inflation?

(D) The inflation rate fell from 12.5% in 1980 to 3.8% in 1982 (on a monthly average basis) even though the unemployment rate rose ‘‘only'' 2.6% during those two years. What other factors caused the inflation rate to decline so quickly?

Reference no: EM131737393

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