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Contemporary macroeconomic environment

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Assessing the contemporary macroeconomic environment. For the past decade or so, the official unemployment rate, U-3, has steadily decreased. Given the theory behind the Phillips curve, we expect this decline to be accompanied by a steady increase in the inflation. However, what we've witnessed is very low levels of inflation - under 2% by all three of the major price indices. What are some of the possible reasons we are witnessing this relationship (low and falling unemployment rates along with low, non-accelerating inflation)?

Reference no: EM132476352

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