I just want to say that I don't know a lot about economics but I was still curious about my political leaning and I know it knows a legit test but I thought it might be fun to take one.
You are watching: Controlling inflation is more important than controlling unemployment.
I took a political compass test and one of the questions was if controlling inflation is more important than controlling unemployment? From my understanding, it might be better to inflation because it might lead to unemployment but I'm not sure.
So a common tool used in Economics to explain the relationship between unemployment and inflation is the Phillips curve. Basically, it says that In the short run, inflation and unemployment have an inverse relationship. Theoretically, if you have lower amount of inflation, you will also have higher rates of unemployment. The theory comes from the idea that because wages are a big part of overall prices, inflation (rather than wages) could be inversely related to unemployment.
However, the Phillips curve has fallen off in recent years as a way to accurately predict unemployment. The relationship has not been seen to be as stable or as strong. Basically, data from 1970 and onwards has messed up the idea of this theory.
Yes, philips curve can't explain shit in the las 10 years. We even had deflation in some countries, and a record low unemployment.
I think why the Phillips curve has failed to explain the relationship in recent years is because of Stagflation in our economy.
I am student, Please correct me if my understanding is incorrect.
It's a fine balance between the two because you cant "positively" change one without inversely effecting the other. This is why the US Federal Reserve follows the dual mandate of stabilizing prices (inflation) and maximizing sustainable employment. Empirically, the US has elected to prioritize employment when push comes to shove but this doesn't mean it's necessarily the right choice (which is why I choose the verb "elected" to describe the Fed's actions).
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The reason this political spectrum quiz is asking you which is better is because it's a highly subjective question which you should read up on and decide for yourself!
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