In Chapter 17, the economic model of the Philips Curve compares the inflation rate and unemployment as having a direct correlation. The Volker model shows how disinflation is needed to keep the economy in check. Alternatively, Chapter 18 discusses exchange rates, which compare the value of products in one country to another, then sets monetary values based on the products you get for that country's money. Use the following questions to expand upon your answers: Write one paragraph discussing why the economy has a natural unemployment rate and how altering that natural state can cause economic issues. Provide an example of what can happen to inflation and, ultimately, the lifestyle of people when unemployment is unstable. Write one paragraph examining one country's production compared to another and how that influences the exchange rates between those two countries. Provide an example of a product and the exchange rates that fluctuate based on changes in production. How do value and perceived value influence these decisions? (Hint: a bottle of water in the desert is much more valuable than a bottle near a freshwater stream.) Write one paragraph reflecting upon the USA economy and how the Big 4 economic issues all impact the decisions of others. Provide an example of how the USA influences what another country would do for monetary, fiscal, or production policies