Suppose that the economy is experiencing a high unemployment rate and at the same time, inflation is quite high. How can the economy return to the natural rate of unemployment if policymakers also want to achieve low inflation? Will it be possible to achieve both in the short run?

Q: What is the short-run relationship between the unemployment rate and inflation rate as explained by…

A: The Phillips curve is a definition of the economy created by A. W. Phillips claimed that the…

Q: Do you think that we should try to control inflation or that we should let the market take care of…

A: Inflation refers to a rise in the general price level of goods and services for particular period of…

Q: could policy makers achieve a permanently lower level of unemployment if they were prepared to…

A: The Philips curve depicts the relationship between the inflation and unemployment rates.  The…

Q: A central bank pledges to reduce the inflation rate from 10% to 3%. People reduce their inflation…

A: Inflation is the rise in average general price level over period of time . It reduces the value of…

Q: If firms and workers have adaptive expectations, what impact will contractionary monetary policy…

A: When talking about adaptive expectations, it is one of the approach of making future expectations of…

Q: (long-run Phillips Curve) Suppose the economy is at point D on the long-run Phillips curve shown in…

A: If the inflation rate is unexpetedly high, ploicy makers can go for reduction of inflation by…

Q: Which should central banks focus on more, unemployment or inflation? Why? Please cite sources to…

A: A increase in the cost of goods and services throughout the economy is referred to as inflation. A…

Q: Assuming prices and output are somewhat flexible, an increase in consumer spending will cause…

A: The assumption that prices and output(y) are flexible allows for changes in the equilibrium level as…

Q: Does the Phillips curve have a positive or negative slope?  Explain how this slope is derived. When…

A: The Phillips curve depicts the reciprocal relationship between unemployment and inflation: as…

Q: Assuming prices are sticky in the short run, a decrease in useful government spending will cause…

A: Decrease in G shifts the AD curve to the left, leading to a lower real GDP and a lower price level…

Q: Based on the concept of demand-pull inflation, when the economy is at, or very close to,…

A: Demand-pull inflation explains the imbalance between the aggregate demand and the aggregate supply…

Q: In which situation will the economy move to a point on the Phillips curve where unemployment is…

A: Phillip curve explains the negative relation between the unemployment rate and inflation rate. Here…

Q: Which statement is CORRECT? The Consumer Price Index is considered the best measure of long-run,…

A: )  Consumer price index (CPI) is defined as the average change in the prices of fixed baskets of…

Q: Discuss whether it is possible for policymakers to trade off more inflation for higher output in the…

A: The trade-off between inflation and output can be referred as to a condition where a nation can…

Q: Why is inflation a macroeconomic problem? Why can't an inflation rate of 0% be achieved?

A: In an economy, macroeconomic problems refer to the economic uncertainties that affect the economy as…

Q: Which type of inflation is considered good for the economy and why? Explain you answer using one…

A: Inflation is defined as the overall increase in the price level in the economy. The rate of…

Q: Describe the fiscal and monetary measures that are normally taken to curb inflation.

A: FISCAL MEASURES 1- The two main important tool of fiscal measures are revenue an dtaxes. 2- To…

Q: What can be used to reduce aggregate demand and thereby control demand pull inflation? One word

A: According to the given question Demand pull inflation is basically known as inflation which…

Q: Which of the following is the most correct statement about the relationship between inflation and…

A: The Phillips Curve shows that tehre exists an inverse relationship between inflation and…

Q: conservative" central banker cares   Select one:   A.   less about inflation and more about…

A: When talking about Central Bank, it can be said that it is different from other banking institutions…

Q: Explain what kind of monetary policy and fiscal policy tools can be used to fight against inflation

A: Monetary Policy The goal of the monetary policy is to influence the money supply in the economy to…

Q: Nobel prize-winning economist Milton Friedman once had the following statement: "In- flation is…

A: Inflation refers to the persistent rise in the general price level. Inflation is worrisome for the…

Q: Because inflation targeting focuses on achieving the inflation target, it will lead to excessive…

A: Inflation targeting is defined as the situation under which government adopts the monetary policy…

Q: Which theory of inflation says that inflation is caused mainly by money supply? a. Keynesian theory…

A: The inflation is the increase in the price level of good or service in the economy. For example,…

Q: Q24 The natural rate of unemployment is generally assumed to be Select one: a. the rate of…

A: In an economy natural rate of unemployment refers to the optimal level of unemployment thate occurs…

Q: How can demand-pull inflation lead to cost-push inflation?

A: The demand-pull inflation is a concept when there is an increase in the price level of the final…

Q: The cost of inflation reduction is a large, permanent increase in unemployment. true or false

A: The Phillips curve basically depicts the relationship between inflation and unemployment, and the…

Q: Why is there no upward or downward pressure on the inflation rate when the economy is at full…

A: Inflation refers to the rise in general price levels in an economy. Philips curve shows the…

Q: Assuming the long-run Phillips curve is vertical, a consistent increase in money supply over a…

A: A.W Phillips developed the concept of Phillips curve.

Q: What unique factors in the 1970s era caused widespread inflation?

A: According to the Phillips curve , there exists an inverse relationship between inflation and…

Q: In March of 2020, the Bank of Canada dropped the policy interest rate three times. Were these action…

A: Inflation: - it is the phenomenon of an increase in the prices of goods and services in an economy.

Q: which of the following is true Select one: a. When the actual rate of unemployment is low than…

A: Answer: option b (natural rate of unemployment is the rate of unemployment required to keep the…

Q: On the graph above, suppose point G is on the short- run aggregate supply curve x = 2.5 + 2* (Y -…

A: Given the supply curve equation = π = 2.5 +2× (Y-22) Aggregate demand curve equation = Y=29.25 -0.5π…

Q: According to the misperceptions theory of aggregate supply, if a firm thought that inflation was…

A: Aggregate supply represents the total goods and services that producers produce and sell in the…