Web Links

• p. 424: To try out the "bit/ed" Web site's virtual economy and use the Phillips curve as a guide for policymaking in the United Kingdom, go to http://www.bized.ac.uk/virtual/economy/policy/.

Issues and Applications Web Resources:

• To read Federal Reserve officials’ latest statement about the Fed’s monetary policy actions, go to http://www.federalreserve.gov/fomc/#calendars/.
• To take a look at Fed officials’ latest testimony before Congress and their semiannual reports submitted to Congress, go to http://www.federalreserve.gov/boarddocs/hh/.

The Inflation-Unemployment Relationship
According to the basic aggregate demand and aggregate supply model, the unemployment rate should be inversely related to changes in the inflation rate, other things being equal. This application allows you to take a direct look at unemployment and inflation data to judge for yourself whether the two variables appear to be related.

     Title: Bureau of Labor Statistics: Economy at a Glance

     Navigation: Use http://www.bls.gov/eag/eag.us.htm to visit the Bureau of Labor Statistics Economy at a Glance home page.

Application
Perform the indicated operations, and then answer the following questions.

1. Click on the graph box next to Consumer Price Index. Take a look at the solid line showing inflation. How much has inflation varied in recent years? Compare this with previous years, especially the mid-1970s to mid-1980s.

2. Back up to Economy at a Glance, and now click on the graph box next to Unemployment Rate. During what recent years was the unemployment rate approaching and at its peak value? Do you note any appearance of an inverse relationship between the unemployment rate and the inflation rate?