Because long run Philips curve exists at the natural rate of unemployment. Structural changes in the economy that affect Unemployment will also cause LRAPC to shit
-Shift up in unemployment will shift LRPC to the right
-Shift downward in unemployment will shift LRPC to the left
Stagflation
is when inflation and unemployment increases simultaneously
EX. Baby boom
Women's movement
Civil rights movement
Vietnam war ends
Oil embargo of 1973 and 1979
Disinflation
Reduction in the inflation rate from year to yea this occurs when agregate demand declines.
Deflation
General drop in the price level.
The examples under stagflation helped me understand and get a better idea of in what situations stagflation can and has occurred. I love that your notes are neat and the examples that you give in order to understand the concepts better. :)
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