Tugas Pertemuan 12
DISCUSSION QUESTIONS
1. Differentiate among the three strains of inflation and discuss the potential costs
associated with each one.
2. Discuss the various potential costs of inflation, then relate the magnitude of those
costs to (a) whether or not the inflation is balanced and (b) whether or not the
inflation is anticipated.
3. Discuss how the rate of inertial inflation is reflected in a Phillips curve graph. What
happens to the short-run Phillips curve and the inertial rate of inflation when
unemployment is driven below the natural rate? What happens when
unemployment is allowed to rise above the natural rate? Can cost-push inflation
play a role in your answer to either question? What about demand-pull inflation?
4. Discuss the natural rate of unemployment. What is it? Why did it grow? Has it been
falling recently? Should we worry that it has been growing? How low do you think it
could become? What sort of policies might lower it? What might be the negative
side effects of these policies? Can one state have a lower natural rate of
unemployment than another? What about different countries? Different counties?
Different towns?
5. Describe a world in which auctions are conducted to keep all markets in equilibrium.
Would macro policy be necessary in such a world? What would be the effect of a
supply-side price shock in such a world?
6. If there is no long-run tradeoff between unemployment and inflation, what is the
appropriate role of macroeconomic policy? Illustrate your answer by providing a
brief and illustrative chronicle of a recent event in the economic history of the United
States.
7. Comparing the costs of inflation and unemployment, it can be argued that policy
should always err on the side of jobs and production. Evaluate this view of the
appropriate bias for macroeconomic policy.