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Economics: Macroeconomics- Chapter 30 Inflation, Unemployment and The Business Cycle summary
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Economics IB, Macroeconomics- Chapter 30 Inflation, Unemployment, and The Business Cycle summary pdf.
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Inflation, Unemployment andThe Business Cycle
Chapter 30
Economics 3ed: Global and Southern African Perspectives © 2020 1
, Inflation and unemployment: Recall
• In Chapter 23, you looked at why unemployment and inflation are
problems and how we measure the unemployment and inflation rates.
• In Chapter 26, you used the quantity theory of money to calculate
inflation and money growth in the long run.
• Today: we start by looking at the nature of the mechanisms underlying
the dynamics of inflation. The reading is: Parkin: Ch 30 (pp. 704-726)
(Excluding pp.715-720).
• Milton Friedman famously said that “inflation is always and
everywhere a monetary phenomenon”. In the medium run, the rate of
inflation is determined by the rate of money growth.
• But in the short run, many factors can cause inflation, depending on
how real GDP and the price level interact.
Economics 3ed: Global and Southern African Perspectives © 2020 2
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