There is a short-run trade off between inflation rate and unemployment rate. In the short-run the tradeoff of between inflation rate and unemployment rate creates a challenge for macroeconomic policymakers.
- If you were macroeconomic policymaker, how do you balance the short-run tradeoff between inflation rate and unemployment rate? Explain.
- What is the historical relationship between rates of unemployment and inflation in the U.S. economy? What are the most current figures for the unemployment rate and the inflation rate? What does this say about the U.S. economy today?