Question
Please help me answer these 2 FRPs. Please show all work, and include graphs with explanations. Thanks. 2. In the 1960's many newspaper reporters were
Please help me answer these 2 FRPs. Please show all work, and include graphs with explanations. Thanks.
2. In the 1960's many newspaper reporters were accustomed to reporting a decrease in the unemployment rate when the overall price level increased. However, in the 1970's, when increases in the overall price level were accompanied by increases, not decreases, in the unemployment rate, some reporters went so far as to declare macroeconomics "bankrupt" and unable to explain this "mystery". Using short-run aggregate supply and aggregate demand analysis, explain the "mystery/' of why the increases in the overall price level during the 1960's might have been accompanied by decreases in the unemployment rate and the increases in the overall price level during the 1970's might have been accompanied by increases in the unemployment rate. (Hint: you should accurately draw & label two separate AS/AD graphs.)
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