This Exercise Uses an Aggregate-Supply Curve and a Production Function

question 97

Essay

This exercise uses an aggregate-supply curve and a production function to construct the corresponding Phillips curve.Its purpose is to better understand the assumptions behind the short-run Phillips curve.Suppose the aggregate production function of an economy is Y=L,where Y is output and L is labour (employment).Unemployment is U=LF-L,and the unemployment rate is u = U/LF.We also need to assume that the labour force (LF)is constant,such that an increase in the number of employed people (DL)corresponds to an equal decrease in the number of unemployed (-DU).Let us assume a very simple-short run aggregate supply curve,Y=P.Question: For the price levels P equal 100,105,and 115,find two inflation-unemployment points in a Phillips curve diagram.Consider LF=120.

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Definitions:

Nature-Nurture Issue

The discussion around the comparative significance of a person's natural characteristics ("nature") versus their life experiences ("nurture") in shaping or influencing the variations in physical and psychological characteristics.

Heredity

The passing of genetic traits from parents to offspring.

Environment

The surrounding conditions, including natural and man-made elements, where an organism lives, which can influence its development and behavior.

Ergonomics

The study of people's efficiency in their working environment, primarily focusing on the design of equipment and systems that promote safety and comfort.