Work It Out 100 0 The Phillips Curve for the United States Step 1. Go to this website (http://1.usa.gov/1c3psdL) to see the 2005 Economic Report of the President. Step 2. Scroll down and locate Table B-63 in the Appendices. This table is titled "Changes in special consumer price indexes, 1960-2004." Step 3. Download the table in Excel by selecting the XLS option and then selecting the location in which to save the file. Step 4. Open the downloaded Excel file. Step 5. View the third column (labeled "Year to year"). This is the inflation rate, measured by the percentage change in the Consumer Price Index. Step 6. Return to the website and scroll to locate the Appendix Table B-42 "Civilian unemployment rate, 1959-2004. Step 7. Download the table in Excel. Step 8. Open the downloaded Excel file and view the second column. This is the overall unemployment rate. Step 9. Using the data available from these two tables, plot the Phillips curve for 1960-69, with unemployment rate on the x-axis and the inflation rate on the y-axis. Your graph should look like Figure 12.9. co Inflation Rate (%) w N Unemployment Rate (%) Figure 12.9 The Phillips Curve from 1960-1969 This chart shows the negative relationship between unemployment and inflation. Step 10. Plot the Phillips curve for 1960-1979. What does the graph look like? Do you still see the tradeoff between inflation and unemployment? Your graph should look like Figure 12.10.308 Chapter 12 | The Keynesian Perspective un o Inflation Rate (%) N W 0 0 2 6 8 10 12 Unemployment Rate (%) Figure 12.10 U.S. Phillips Curve, 1960-1979 The tradeoff between unemployment and inflation appeared to break down during the 1970s as the Phillips Curve shifted out to the right. Over this longer period of time, the Phillips curve appears to have shifted out. There is no tradeoff any more