Reference no: EM133720840

Discussion Post: High Inflation and Low Unemployment

Professional economists often work in environments where they are expected to communicate their ideas not only with other economists, but also to the public, who doesn't have any economics background. In this assignment, you will take a stance on the following issue (detailed in the scenario below). You should not assume that the audience has any knowledge of economics or has taken ECO 102. Because of this, you should always define any economic terms that you introduce into your writing (if in doubt, ask a friend who hasn't taken the course if they can understand your definition).

Scenario:

In one year (July 2021 - June 2022), inflation rate in Canada has increased from 3.7% to 8.1% while unemployment rate fell from 7.5% to 4.9%. Given these observed phenomena, using economic concepts that you have learned from ECO 102, provide your arguments in the following perspectives: (i) Milton Friedman (founder of monetary theory) famous comment "inflation is always and everywhere a monetary phenomenon"; (ii) short-run and long-run Phillips curves; (iii) mismanagement of fiscal and monetary policies; (iv) typical aggregate supply and demand shocks; (v) unforeseen global disturbances; (iv) impact on the parties who loses or gains, etc. Note: this list is just suggestive. You could use other relevant topics discussed in ECO102 to analyze the scenario. You do NOT have to discuss all aforementioned perspectives, rather, you must choose three perspectives and support your arguments. You are encouraged to use online news (local news media) and magazine (Economist) articles to support your argument.

Your task is to think about these phenomena, using the kinds of theories we have discussed in ECO 102. Notice that this is not a calculation problem we have not specified the function you need in order to perform exact calculations. Instead, we want you to think of this more generally using economic intuition. While there are lots of different angles that you can take, we encourage you to take a more focused approach, choosing a couple of major topics covered in the course (e.g., monetary and fiscal policies, AS-AD model, Phillips curve, etc.). You should be clear about your analysis and any implications that you are referring. If you make any additional assumptions, you must clearly state them and if relevant, address what would happen if those assumptions do not hold.