Phillips Curve: Impact on Inflation & Unemployment - Edubirdie

University:
California State University, Northridge
Course:
ECON 160 | Principles of Microeconomics
Academic year:

2023
Views:

487

Pages:

2
Author:

Mahmoud M.

Microeconomics notes For a transaction with money: ● M x V = P x Q so; - M Income - V Speed of money (how much money changes in a year) - P Average price - consumption price - Q total real output - P x Q nominal GDP quantity theoretical amount of money. MxD=PxQ Phillips Curve, - Inverse relationship between unemployment and inflation Demand drives inflation - Increase in demand causes average price to rise Price rise in price - Decrease in 4 causes average price to rise ● 4 4 increase of goods not suitable for Phillips curve ● Made of shock goods - reduce the push of goods to increase output price ● May cause stagflation - Unemployment and inflation combined Total consumption Actual consumption GDP: - Goods for base year and the total price of services is - The company is ready to be built in a jiffy. Total Supply: The Relationship between Real GDP Amounts and Price Levels. Long-Run Total Supply: - Relationship Between Real GDP Model and Price Level - Price Level Controls Total Employment as Balance of Payments Changes. - Potential GDP is vertical as it is independent of price. Short-Run Total Supply: - The relationship between real GDP and price level. - Expenses stay the same when wages change. - Real GDP correlates with Capital GDP - Economy reaches full employment. Change in total: ● Potential GDP growth, LRAS and SRAS growth. Amount of Fully Employed Labor: ● More Fully-Employed Labor, More GDP Amount of Capital: - More Capital, More Product - Capital including human capital

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