debate: stagflation or phillips curve theory on short answer questions? (1 Viewer)

[bakerlog]

i was under the clear impression that inflation was decreasing whilst unemployment was rising, hence the phillips curve?

now i could be wrong in this. alot of people are saying that inflation was also rising? thus stagflation?

can we get an agreed confirmation on this issue?

 

[neo o]

What does the word 'relationship' mean to you?

 

[bakerlog]

how one will affect the other, or share a particular trend

 

[Shuter]

I didn't use either term as such.

It was not stag flation however.

 

[neo o]

how one will affect the other, or share a particular trend

Therefore the phillips curve is more appropriate as it shows an inverse relationship between inflation and unemployment. Stagflation is merely a term applied to simultaneous rising unemployment and inflation. However, it should be duly noted that if you explained either answer sufficiently, you'll probably get marks, since while I don't think stagflation is the BETTER answer it is reasonably valid.

 

[Ralph]

Inflation rose between years 1 and 2 and fell between years 2 and 3, however unemployment rose steadily by 5% per year, however job vacanies also steadily falled hence the participation rate falling,

Therefore is no theory its just a random relationship, inconsistant with that long run philips curve included in the sylabus, might have to do with something like MPC or MPS effecting the speed of things?

 

[Sweet_Lemon]

tat question about inflation and unemployment...though they move different direction... did think about stagflation...but wrote something totally wrong...faint~~~

 

[neo o]

It was not stag flation however.

Rising Unemployment
Rising Inflation

Seems like stagflation to me

 

[Sweet_Lemon]

i talked about phillipzz....if i remebered correctly~

 

[neo o]

BTW if you look at the marking guidelines for past years they dont specify a correct answer. eg:

"Correctly states two examples of economic growth"

Its left to the markers discretion.

 

[Sweet_Lemon]

i hope when they mark mine...don't be too stressed...hahaha~~

 

[Ralph]

Inflation didn't rise in year 3 it fell!, whilst unemploment was increasing steadily unlike inflation

 

[bakerlog]

but inflation was not rising! i calculated the inflation rate which fell from 2% in year 2 to 0.8% in year 3. and ther is no way the inflation rate for year 1 can be calculate without a base year. hence the only change in the level of interest rates was a fall.

now this is my understanding. plz prove me wrong

 

[Sweet_Lemon]

thought both yrs were falling....can't remeber if press the cal rite or not....this makes people start to panic about their answer~~~laaa

 

[Ralph]

I'm not arguing with you i agree like a said before it fell in year 3.

 

[bakerlog]

goodo.

well fellas all the best with ur results. i might return to see if ur marks lived up to your expectations. until then, party hard after hsc.

 

[Sweet_Lemon]

hey....when they said publish marks on newspaper...do they mean the excellent ones?? like top in states or all the list???? (dat's gona be long...hahaa)

 

[Rorix]

the phillips curve doesn't mean that you cant have inflation and unemployment...
just says that a fall in u/e comes at the expense of rising inflation, or visa

 

[Sweet_Lemon]

it asked for analyse....so just mentioned the existance of phillip curve....the rest... can't remember~~~ekekekek....but certainly didn't talk about stagflation~~

 

[Shuter]

the phillips curve doesn't mean that you cant have inflation and unemployment...
just says that a fall in u/e comes at the expense of rising inflation, or visa

But the point is this economy had a rising unemployment rate even though the inflation rate was going both up and down. Therefore neither the conventional phillips curve or stagflation could explain the trends in the economy of this period.