The Phillips Curve andExpectations Theory

CHAPTER

27

2Tucker Economics for Today, 4e • Ch 27 The Phillips Curve and Expectations Theory© 2005 Thomson/South-Western

EXHIBIT 1 THE THEORETICAL RELATIONSHIP BETWEEN CHANGES IN AGGREGATE DEMAND AND THE PHILLIPS CURVE

3Tucker Economics for Today, 4e • Ch 27 The Phillips Curve and Expectations Theory© 2005 Thomson/South-Western

EXHIBIT 2 THE PHILLIPS CURVE FOR THE UNITED STATES IN THE 1960S

Source: Economic Report of the President, 2004, http://www.gpo.access.gov/eop/index.html, Tables B-35 and B-64.

4Tucker Economics for Today, 4e • Ch 27 The Phillips Curve and Expectations Theory© 2005 Thomson/South-Western

EXHIBIT 3 INFLATION AND UNEMPLOYMENT RATES FOR THE UNITED STATES, 1970–2003

Source: Economic Report of the President, 2004, http://www.gpo.access.gov/eop/index.html, Tables B-35 and B-64.

5Tucker Economics for Today, 4e • Ch 27 The Phillips Curve and Expectations Theory© 2005 Thomson/South-Western

EXHIBIT 4 THE SHORT-RUN AND LONG-RUN PHILLIPS CURVES

6Tucker Economics for Today, 4e • Ch 27 The Phillips Curve and Expectations Theory© 2005 Thomson/South-Western

EXHIBIT 5 MONEY SUPPLY GROWTH AND PRESIDENTIAL ELECTIONS, 1960–2000

Source: Economic Report of the President, 2004, http://www.gpo.access.gov/eop/index.html.

7Tucker Economics for Today, 4e • Ch 27 The Phillips Curve and Expectations Theory© 2005 Thomson/South-Western

EXHIBIT 6 ADAPTIVE EXPECTATIONS VERSUS RATIONAL EXPECTATIONS

8Tucker Economics for Today, 4e • Ch 27 The Phillips Curve and Expectations Theory© 2005 Thomson/South-Western

EXHIBIT 7 HOW DIFFERENT MACROECONOMIC MODELS CURE INFLATION

9Tucker Economics for Today, 4e • Ch 27 The Phillips Curve and Expectations Theory© 2005 Thomson/South-Western

EXHIBIT 7 HOW DIFFERENT MACROECONOMIC MODELS CURE INFLATION (Continued)