5. Suppose that Inflation and Unemployment interaction is modeled by p=a-T-BU + gn dπ dt du dt =j (p = π) =-k(m-p) Find time path for p if the following data is given g= 1, j = 1, ß = 1, k = 5, m = 1 Find intertemporal equilibrium value of p. 6. Find time path for U, and describe the long-run Phillips relation
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Please find the attached question. Use Calculas and Economics
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- 10) In the Phillips curve equation, which of the following will NOT cause a rise in the current inflation rate? A) a rise in the minimum wage, z B) a rise in the expected inflation rate C) a rise in the employment insurance, z D) a drop in the markup, ? E) a fall in the unemployment rate 2. Using the AS and AD, WS and PS and IS-LM graphs, illustrate and explain the short run and medium run effects of a less stringent enforcement of existing antitrust legislation (Monopolist market power increased). Explain what happens to P, Y, i, W/P, I and u.Suppose that an economy has the Phillips curvep=p-1 - O.S(u - 0.06),a) What is the natural rate of unemployment?b) Graph the short-run and long-run relationships between inflation and unemployment.c) How much cyclical unemployment is necessary to reduce inflation by S percentage points?d) Using Okun's law, compute the sacrifice ratio e.e)Inflation is running at 10 percent. The Fed wants to reduce it to 5 percent. Give Iwoscenarios that will achieve that goal.. Assume that the economy experiences no change in productivity, money demand or its natural rate of unemployment in either the short or long run. The inflation rate responds immediately to correspond to the money supply growth rate. However, wage inflation adjusts to changes in the inflation rate with a time lag. Draw a diagram with inflation on the vertical axis and the unemployment rate on the horizontal axis that illustrates the Phillips curve relationship in the short run. Label the curve as PC1. Mark a point N on the horizontal axis that represents the natural rate of unemployment
- Question 16 In the Phillips Curve diagram below, the economy is currently at its non- accelerating inflation rate of unemployment with an inflation rate of L. Inflation (%) ABCD L M 0 S LRPC SRPC2 SRPC1 NAIRU T Unemployment (%) Which one of the following is least likely to reduce the non-accelerating inflation rate of unemployment? Measures to increase the mobility of labour Measures to improve the availability of job information An increase in spending on education and training A rise in aggregate demandConsider the Efficiency Wage story. Suppose we had several periods of 0 inflation. Let ST represent the total supply of labor; SNS the supply of non-shirking (not lazy) workers, and SShrk the number of shirking (lazy) workers. Suppose we had several periods of 0% inflation. Then if we had an increase in Aggregate Demand that caused an increase in the Aggregate Price level, we would see which of the following in the short run? Group of answer choices a) higher inflation and lower unemployment. b) None of the other options. c) lower inflation (which would be deflation given our premise) and higher unemployment. d) higher inflation and higher unemployment. e) lower inflation (which would be deflation given our premise) and lower unemployment.3. a) Using AD-AS model, explain how a negative demand shock due to COVID 19 will affect the economy in the short run and long run (Show short run and long run adjustment in a single diagram). b) Derive the equation of Expectation Augmented Phillips curve using standard equation of Aggregate Supply (AS) and explain causes of inflation in terms of it. How does expectation augmented Phillips curve explain Stagflation?
- Q1 A) Illustrate the short-run and long-run impact of the Covid-19 pandemic (unexpected demand shock) to Thailand using both the AD-AS model and the Phillips curve. Assume the Thai economy starts at full employment. B) How would an adverse supply shock change the short-run tradeoff between inflation and unemployment? Illustrate your answer using a Phillips curve diagram.Suppose that = 1° , and the Phillips curve equation for the economy is below: T = 4.5% - 0.2u, If inflation (T,) is 3.5%, then u, is 22.5 %. v tend to decrease If the actual unemployment rate in this economy is equal to 6%, the rate of inflation wi tend to increase be zero remain constanta) Are the effects of an increase in aggregate demand in the AD-AS model consistent with the Phillips curve? Explain. b. Discuss the factors determining the slope of the short-run Phillips curve. Is the linear shape appropriate? Why or why not?
- Starting from any point in tne Pnillips curve shown in Figure 12.5, an unexpected decrease in oil prices will move the economy from point A c to point b. c to point a. C a to point b. D b to point c. Not enough information is given. Figure 12.5: Phillips CurveQ22) What is the Phillips curve consistent with? Option the AD shifting along a stationary SRAS the AD shifting along the LRAS the LRAS shifting along a stationary AD the SRAS shifting along a stationary ADAssume that the price level in an economy is stable with expected inflation initially equal to 3% in period 0. Further assume the economy is then hit by an expansion at the beginning of period 1, and employment remains at a constant high level until the beginning of period 4. With ‘time period’ on the xaxis and ‘inflation rate’ on the y-axis: (i) Plot the path of the bargaining gap (assume it is equal to 1%), inflation and expected inflation from period 1 to the end of period 4. (ii) Provide some reasons for why the bargaining gap might disappear after period 4, and state any other assumptions you are making. (iii) Explain how an increase in the central bank’s policy interest rate would affect the exchange rate through the market for financial assets (such as government bonds). What impact would this have on aggregate demand?