Final paper for Econ 203

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This paper is for Econ 203 (Ashford University). The paper should be 8 pages long (does not include title page and references). Details of the paper are attached. This needs to be completed by Sunday, December 16.

Week 5 - Final Paper The Short-Run and Long-Run Relationship Between Unemployment and Inflation [WLOs: 1, 2, 3, 4] [CLOs: 1, 2, 4, 5, 6, 7] Unemployment and inflation are an economy’s two most important macroeconomic issues. The federal government’s fiscal policy and the Federal Reserve’s monetary policy try to maintain both a low unemployment rate around a natural rate and a low inflation rate around 2%. In your Final Paper, • • • • • • Evaluate the historical relationship between unemployment and inflation. (hint: You may start from A.W. Phillips’s finding of the relationship between unemployment and inflation.) Distinguish between the short-run and the long-run in a macroeconomic analysis. Why is the relationship between unemployment and inflation different in the shortrun and the long-run? Assess the recent 20-year U.S. unemployment and inflation data. Do the current U.S. unemployment and inflation data confirm the short-run Phillips curve? Analyze why the recent 20-year U.S. unemployment and inflation data approves or disproves the short-run Phillips curve. Evaluate whether the Phillips curve can still validly resolve today’s issue of unemployment and inflation and forecast unemployment and inflation. Why or why not? Recommend any policy, method, or opinions for the current U.S. unemployment and inflation as a policy maker for either fiscal policy or monetary policy (or both). The Short-Run and Long-Run Relationship Between Unemployment and Inflation Final Paper • • Must be eight to 10 double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Ashford Writing Center APA Style resource (Links to an external site.)Links to an external site.. Must include a separate title page with the following: o Title of paper o Student’s name o Course name and number o Instructor’s name o Date submitted • • • • • • For further assistance with the formatting and the title page, refer to APA Formatting for Word 2013 (Links to an external site.)Links to an external site.. Must utilize academic voice. See the Academic Voice (Links to an external site.)Links to an external site. resource for additional guidance. Must include an introduction and conclusion paragraph. Your introduction paragraph needs to end with a clear thesis statement that indicates the purpose of your paper. o For assistance on writing Introductions & Conclusions (Links to an external site.)Links to an external site. as well as Writing a Thesis Statement (Links to an external site.)Links to an external site., refer to the Ashford Writing Center resources. Must use at least five scholarly, peer-reviewed, and other credible sources in addition to the course text. o The Scholarly, Peer-Reviewed, and Other Credible Sources (Links to an external site.)Links to an external site. table offers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for this assignment, please contact your instructor. Your instructor has the final say about the appropriateness of a specific source for a assignment. Must document any information used from sources in APA style as outlined in the Ashford Writing Center’s Citing Within Your Paper guide (Links to an external site.)Links to an external site.. Must include a separate references page that is formatted according to APA style as outlined in the Ashford Writing Center. See the Formatting Your References List (Links to an external site.)Links to an external site. resource in the Ashford Writing Center for specifications. Please make sure there is an introduction and a conclusion. Also make sure the paper is not written in the “Passive”. Run through Grammarly or some other tool. Paper should be under 20% for likeness. Must be completed by Sunday. **

Tutor Answer

Prof_Alfred
School: UIUC

Attached.

final report
by Prof A

Submission date: 16-Dec-2018 09:00AM (UT C-0500)
Submission ID: 1057781213
File name: Unemployment_and_Inf lation_1.doc (275K)
Word count: 3126
Character count: 17748

final report
ORIGINALITY REPORT

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SIMILARIT Y INDEX

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INT ERNET SOURCES

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Running head: UNEMPLOYMENT AND INFLATION

Unemployment and Inflation
Name
Institutional Affiliation

1

UNEMPLOYMENT AND INFLATION

2

The Short-Run and Long-Run Relationship between Unemployment and Inflation
Introduction
Inflation and unemployment are the two macroeconomic challenges that adversely affect
the economy. The two issues have for a long time remained the fundamental subjects of concern
for any government. Inflation refers to a continuous rising tendency in the universal measure of
prices for the whole market. It occurs when the supply of money in the market surpasses the
accessible products and is ascribed to a shortage in budget funding whereby the deficiency in the
budget can be capitalized through creating more money (Lipse & Scarth 2011). Unemployment
happens when people are assiduously looking for jobs but their efforts prove futile as they do not
get any job. There is not even a single state that wants to be faced with the catastrophes of high
unemployment rates and inflation since they are extremely detrimental to the economy and their
effects are long-lasting. Inflation destabilizes a country and takes away it competitive prowess.
The two factors, unemployment and inflation are viewed collaboratively since in the
event that one goal is achieved, there is a high likelihood of losing the other one, for instance in a
situation where the economic If economic sustainability is nourishing, it may be instrumental in
promoting low increased employment rates, yet the challenge of inflation may be inevitable.
Because of this, the government finds it demanding to curb the unemployment and inflation
problems jointly. This paper aims at evaluating the short-run and long-run correlation amidst
unemployment and inflation by reviewing the unemployment and inflation statistics of U.S in the
past twenty years using the Philips Curve. It concludes with recommendations of the policies,
methods or opinions for the contemporary U.S. unemployment and inflation (Forder, 2014).
The historical connection between unemployment and inflation

UNEMPLOYMENT AND INFLATION

3

The connection betwixt lack of employment and inflation is well described by the Philips
curve which is an economic theory that states that there exists a fived and inverse
correspondence amidst the inflation-unemployment rate in an economy. A.W. Phillips in 1958
invented the Philips Curve and wrote his views as concerns the reverse interaction amidst salary
changes and joblessness. His hypothesis was proved verifiable for many industrialized nations.
Philip’s work was further researched and edited by Paul Samuelson and Robert Solow to mirror
the connection between inflation and unemployment in 1960 (Papadopoulos, 2014). Since
salaries form the biggest factors of costs, inflation (as opposed salary changes) could reflect an
inverse association with unemployment.
The Phillips curve theory edited by Paul Samuelson and Robert Solow was seemingly
steady and certain. Statistics from the 1960s depicted the connection amid unemployment and
inflation relatively efficient. The curve provided prospective effects of the economic policies
which could be utilized to attain aggregate employment at high-cost degree or to lessen inflation
at an expense of low employment. Nevertheless, an attempt by the government to use the Phillips
curve in controlling the lack of employment and inflation in the market proved the correlation
inapplicable and statistics thereafter followed the curve after adjustments were made. The curve
theorized that if there is a low unemployment rate, in turn, the number of qualified people that
will search for a job is less (Lundborg & Sacklén 2006). Organizations in response to low turnup would increase their salaries to lure the few skilled workers available. Phillips illustrated that
a specific rate of joblessness would result to a particular inflationary level.
The theory illustrated that policymakers were able to keep a reduced unemployment rate
for a long time, provided that they could endure high inflation rates. This ideology would later be
criticized monetarists under the leadership of Milton Friedman who complained that it was not

UNEMPLOYMENT AND INFLATION

4

applicable in the long run. Their view was that in the long-haul, adjustments in prices would not
affect the e...

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Anonymous
10/10 would recommend. Responsive and helpful.

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