2.6.4 Conflicts and trade-offs

Question 1

Phillips curve

Answer 1

Shows a trade-off between inflation and unemployment. Demand side policy to reduce unemployment could conflict with price stability.

Question 2

Policy asymmetry

Answer 2

When a given change in interest rates affect different groups or different countries to a letter of greater degree

Question 3

Trade off

Answer 3

Implies that choices have to be made between different objectives of policy.

E.G.trade off between economic growth and inflation