ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- (a) What events of the 1970s and 1980s made economists believe that the shortrun relationship between inflation and unemployment was unstable (not fixed and permanent)? (b) Explain, using a diagram(s) and the concept of stagflation, the relationship between shifts in the SRAS curve and the position of the short-run Phillips curve.arrow_forwardUnanticipated inflation Unanticipated inflation penalises: A. those earning incomes that are taxed in nominal terms B. those who hold cash C. those who lend money at a fixed interest rate D. those earning incomes that are taxed in nominal terms, those who hold cash and those who lend money at a fixed interest ratearrow_forwardNegative real interest rates occur when the inflation rate is greater than the nominal interest rate. True or false? a. False b. Truearrow_forward
- Demand-pull inflation arises due to Part 2 A. a higher price level. B. a decrease in the short-run aggregate supply. C. a depreciation of the US$. D. a decrease in the aggregate demand. Part 3 Which of the following would create demand-pull inflation? Part 4 A. An increase in household income. B. A decrease in wages paid to workers. C. Increased international trade barriers. D. An increase in the real rate of interest.arrow_forwardWhich of the following economic changes are consistent with cost-push inflation? (More than one may apply) A. An increase in the price level B. A sudden and sharp decline in the quantity of money issued by the central bank C. Rising unemploymentarrow_forwardGuy Ferrell, a student who lives in the country Paragon, observes that analysts are cutting their growth forecasts for the economy for the coming year. Most of them based their analysis on the fact that the level of inflation in the economy would adversely affect economic growth. However, Guy looks up the weekly inflation data for the past couple of months and finds that inflation has been stable and low. Which of the following, if true, would explain the analysts' predictions? A. The Producer Price Index has been steadily increasing over the past few months. B. A recent revision of the previous year's CPI data showed that it was overstated by one percentage point. C. The Purchasing Manager's Index, published by a supply-chain management firm in Paragon has been stable for the past couple of months. D. The government recently increased its growth projections for the year by 100 basis points. E. Most of Paragon's trade partners have…arrow_forward
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