AP Macro – 2/28/2020

I.  Bellwork

A.  Create a graph demonstrating cost-push inflation.  Show the change in price level

B.  Create a graph demonstrating demand-pull inflation.  Show the change in price level

II.  Objectives:

  • Use the Phillips curve to show the nature of the short-run trade-off between inflation and unemployment
  • Explain why there is no long-run trade-off between inflation and unemployment
  • Discuss why expansionary policies are limited due to the effects of expected inflation
  • Identify the problems with deflation that lead policy makers to prefer a low but positive inflation rate.

III.  Discussion:    P328-336

A.  Introduction to the Phillips Curve

1. The Short-Run Phillips Curve

2. Inflation Expectations and the Short – Run Phillips Curve

B Inflation and Unemployment in the Long Run

1. The Long-Run Phillips Curve

2. The Natural Rate of Unemployment, Revisited

3. The Costs of Disinflation

C. Deflation

1. Debt Deflation

2. Effects of Expected Deflation

IV Notes:

  • Relationship btw AD, Unemployment & Inflation
  • Relationship btw AS, Unemployment & Inflation
  • Copy SRPC & LRPC – video

V.  Video Resources

VI.  Classwork/Homework

  • 34.1, 34.2 , 34.3 WS
  • 5.2 A & 5.2B Phillips Curve

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