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21070075
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Question 1: In the attached excel file is the data for inflation and unemployment rate in the

US from late 1999 to February 2022.

1. Plot the two series on the same graph.

Correlation between inflation and unemployment rate in the


US from late 1999 to February 2022
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
10/9901/0104/0207/0310/0401/0604/0707/0810/0901/1104/1207/1310/1401/1604/1707/1810/1901/21
-2.0
-4.0

Inflation Unemployment rate

2. Describe broadly the movement of inflation and unemployment between 2000 and
2022. Do they seem correlated (moving together or against one another)? Why or
why not?

Witnessing individually, the unemployment rate shows partial consistency, at around


4.0 throughout the 3-year period, with some rise from early 2002 to early 2003 at 6.0
and early 2009 to late 2010 at 10.0, as well as a sudden plummet to 15.0 in June 2020.
On the contrary, the inflation rate was significantly unstable, with only an obvious drop
to a negative value of -2.0 in July 2009, at the same time as one of the rise in the
unemployment rate; and a significant rise to 4.0 and then 6.0 from late 2021 to early
2022, while the unemployment rate was decreasing to the usual rate. Overall, it can be
seen that the inflation rate and the unemployment rate in the US during the given time-
frame depict an inverse correlation relationship. This is reasonable since inflation and
unemployment have historically maintained an inverse relationship, as represented by
the Phillips curve (The Investopedia Team, 2024). To be more specific, according to The
Investopedia Team (2024), low unemployment (when more people are working) means
more consumers have the discretionary income to purchase goods, and the demand for
goods rises. When that happens, prices follow. But during periods of high
unemployment, though, customers purchase fewer goods, which puts downward
pressure on prices and reduces inflation.
3. Recently (later 2021/early 2022), inflation seems to rise quickly while the
unemployment rate falls. If the policymakers (central bank and government) worry
about rising inflation, what can they do?

When projecting a rise in inflation, one primary way the policymakers can ease the
situation is to increase the interest rate for keeping money in the bank or borrow from
them. This would encourage people to save more money in their accounts and
discourage people from borrowing, therefore spending less on shopping, investment
and other related activities, which prevent new money to be created and lower the
market price. Furthermore, the policymakers can decrease the amount of money
printed so the money supply corresponds to the economy’s growth, which support the
market to adjust and return to normal.

Question 2: Please select one among two articles attached and summarize it in less than
1000 words.

Option 1:
The article discusses a new perspective on how economists have been thinking about
total factor productivity (TFP) growth, which is seen as a key driver of economic growth.
Thomas, an economist at New York University, argues in a new paper that economists have
been mistaken when looking at the total factor productivity. The standard sense is that the
rate of growth of total factor productivity has been falling, which is bad for living standards
in the United States and around the world. However, Philippon says the rate of growth’s
measurement notion for total factor productivity is wrong. To be more specific, he argues
that the growth in total factor productivity is linear, not exponential, with a certain increase
in know-how each year. He confirms it through a line chart, which apply two projections
method using two mathematical models on total factor productivity using self-collected
data. If that claim is true, then it means that over time, total factor productivity would
become increasingly small as a percentage of a growing economy, which is not a good sign,
since Paul Krugman, Philippon’s college, has stated that in the long run, productivity is
crucial elements for a country to improve its living standard. Additionally, Philippon spots
three “structural breaks” in the data (times when the rate of invention shifted upward). He
explains these with corresponding widespread adoption of world-changing general-purpose
technologies, and projects another structural breaks in the future with the development of
A.I. However, other economists, such as David Weil, a Brown University economist, and
Gregory Mankiw, a Harvard economist suspects Philippon’s argument. Nevertheless,
Philippon’s statement still support in answering the puzzling questions regarding why total
factor productivity has not grown more.

Note: You can use Vietnamese or English for both questions.

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