Whew! After the last chapter this one is easy.
Describe the short run trade-off between inflation and unemployment. Why is there not a long-run trade-off? How long do you think the short-run lasts? (Or do you believe there is a trade-off at all – many economists don’t. Why?
Here is a column by our text book author on the subject: https://www.nytimes.com/2019/08/09/business/trade-inflation-unemployment-phillips.html
The trade off between inflation and unemployment (in the short term) is a negative one as shown by the Phillips curve. If inflation increases in the short term, unemployment decreases. If inflation decreases in the short term, unemployment increases. In the long term, inflation doesn’t have an effect on unemployment as the economy will return to the natural rate of unemployment. I think the long term run lasts about several years. I would guess that the short run lasts a year or less. There isn’t a long run trade off between inflation and unemployment because monetary growth does not influence factors of real variables such as output and employment. The market has the power of unions, the role of efficiency wages, and the process of job search, which determine the economy’s unemployment rate. So the 2 rates are unrelated, in the long run.
Dude.World 