ECON 2010 Lecture Notes - Alan Greenspan, Ben Bernanke, Paul Volcker
Document Summary
Unemployment & inflation trade-off: low unemployment levels will produce labor shortages, making the hire process more difficult for time, to shorten the search period, most firms respond by raising wages or other benefits. A curve showing the short-run relationship between the unemployment rate & the inflation inflationary effect. rate. 2: while there was consensus for short run phillips curve, there was debate that any long run structural, recall, the lras represents a long run, sustainable, potential output level. This level is not influenced relationship held. by the price level, & is vertical: therefore, if lr output levels aren"t effected by price, the lr employment level will not be related either. The employment level will only be dictated by the labor needs of the economy when producing to the. Lras level: the long-run phillips curve i. ii. If no relationship holds between level changes & employment, then the lr phillips curve will be vertical.
