Macro - Lecture 4 (Phillips Curve and Unemployment)

Question 1

What is the Phillips Curve?

Answer 1

A curve showing the inverse relationship between inflation and unemployment.

Question 2

What is the Augmented Phillips Curve?

Answer 2

A version that incorporates inflation expectations, showing the short-lived trade-off.

Question 3

What is Okun’s Law?

Answer 3

A 1% increase in unemployment leads to a 2% drop in GDP.

Question 4

What are the types of unemployment?

Answer 4

Frictional Unemployment.

Structural Unemployment.

Cyclical Unemployment.

Natural Rate of Unemployment.

Question 5

What is Frictional Unemployment?

Answer 5

Unemployment caused by workers transitioning between jobs.

Question 6

What is Structural Unemployment?

Answer 6

Unemployment due to shifts in industries or skill mismatches.

Question 7

What is Cyclical Unemployment?

Answer 7

Unemployment caused by reduced demand during economic downturns.

Question 8

What is the Natural Rate of Unemployment?

Answer 8

The long-term equilibrium level of unemployment (frictional + structural).