The Phillips Curve in Lowland Takes the Form Of $\pi$ = 004 - 05 (U - 0

question 46

Essay

The Phillips curve in Lowland takes the form of $\pi$ = 0.04 - 0.5 (u - 0.05), where $\pi$ is the actual inflation rate and u is the unemployment rate. The Phillips curve in Highland takes the form of $\pi$ = 0.08 - 0.5 (u - 0.05). The current unemployment rate in both countries is 9 percent (0.09). a. Explain the similarities in the Phillips curves in Highland and in Lowl and.
b. Explain the difference in the Phillips curves in Highland and in Low and.
c. In which country will policymakers face a bigger tradeoff if they try to reduce unemployment in the short run?

---

Definitions:

Blue Eyes

A specific eye color that results from a lack of melanin in the iris, leading to a blue appearance due to light scattering.

Illusory Correlation

The perception of a relationship between two variables when no such relationship exists or is weaker than perceived.

Accurately Predict

The ability to foresee or anticipate an event correctly based on existing information or models.

Search Engine

A search engine is a software system designed to carry out web searches, enabling users to find information on the internet by entering keywords or queries.