Posted by Samantha on Sunday, September 10, 2006 at 10:44pm.
Hi! I had to graph inflation/unemployment...
Why did the inflation rate start increasing and the unemployment rate started decreasing after 2000???
Thanks.
I should let economyst answer, but I'll comment on this, If economyst responds use his/her word on the subject.
I suppose you did some kind of x-y scatter plot for the data points?
I think classical economics theorizes that inflation and unemployment are inversely related. As unemployment decreases and full employment is reached this puts upward pressure on prices. Also skilled labor becomes scarcer and wages rise too.
When the opposite phenomena happens, i.e. unemployment rises, prices are supposed to pull back. This is not always the case though and sometimes we have stagflation. I'll let economyst provide a clearer and detailed explanation to your question.
Roger's answer is excellent
just search for smartalec economics in google.
and ask them, easy!
I am doing economics for the first time and I would like to know what are the features of macroeconomics?
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