Macroeconomics, 9/e

Campbell R. McConnell, University of Nebraska, Lincoln
Stanley L. Brue, Pacific Lutheran University
Thomas P. Barbiero, Ryerson University

Long-Run Macroeconomic Adjustments

Internet Application Questions


1		Read over the textbook's material on the Philips Curve (Page 365-371), then go to: www.dayton.bcentral.com/dayton/stories/2000/08/21/newscolumn5.html . Answer the following questions: What is the Phillips curve? What relationship did it look at? Why have economists rejected the idea of a "stable, predictable long-run Phillips curve"? Look at both the text and the article. Kathleen Carlson's article points out that, in the year 2000, the U.S. Federal Reserve became concerned that the U.S. unemployment rate (then around 4%) had become too low and would generate inflation. As a result, it was argued, interest rates should be increased. Does Kathleen Carlson support such a policy? Briefly discuss, giving evidence from the article.



2		Go to: http://www.vistech.net/users/rsturge/laffercu.html. Answer the following questions: According to the textbook, what is the Laffer curve? Include a diagram in your explanation. According to the paper by Robert Sturgeon, what economic information does the Laffer curve provide? Why does Sturgeon argue that the Laffer curve should not be discredited? What are some criticisms of the Laffer curve, according to the text?

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