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December 19, 2014

Homework Help: Macroeconomics - inflation vs unemployment!!!!

Posted by Samantha on Saturday, September 9, 2006 at 10:44pm.

I had to graph both the U.S. inflation and unemployment rates on the same graph between the years 1990-2004.

I need to analyze the data. How are the two rates related? How does one affect the other, if so?



One way to analyze the data is to put the inflation data on one axis, say the x-axis, and the unemployment data on the y-axis. You might need to determine some scale to make the presentation usable. If you have 15 data points for each year, then find the range for each set: Subtract the smallest value from the largest. If you do this on a spreadsheet, it'll automatically scale the data. From this plot you should be able to see if there's some kind of direct or inverse relationship between the data. Are they linearly related?


After reviewing my post I'm not sure I was clear on what to do here. If you make a collection of ordered pairs for the data as (inflation, unemployment), then order the data by inflation and plot it you can determine how they might be related. This would be an x-y scatter plot, except that the data would be ordered to see if there's some kind of functinal relationship.
If you look at plots where the data are plotted separately as functions of time, relations between them may not be apparent.

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