According to Friedman, in which of the following situations is the economy in long-run equilibrium?   a.  The expected economic growth rate is 3 percent and the actual inflation rate is 3 percent.     b.  The average inflation rate over the past five years is 2 percent and the expected inflation rate is 2 percent.     c.  The expected inflation rate is 3 percent and the actual inflation rate is 3 percent.     d.  The expected economic growth rate is 2 percent and the expected inflation rate is 2 percent.

Q: According to the Fisher effect, an increase in expected inflation will OA) decrease the demand for…

A: You have posted two independent McQs. According to our guidelines, only the first McQ is answered.…

Q: After experiencing the new equilibrium inflation rate and its effect on their real wage, workers…

A: Inflation expectations are essentially the rate at which individuals—customers, organizations,…

Q: A.W. Phillips concluded that there is a trade-off between the inflation rate and the unemployment…

A: Phillips curve shows the relationship between inflation and Unemployment which is inversely related…

Q: Suppose real and potential GDP are initially equal. If the Fed increases the target inflation rate,…

A: This can be described as the concept that shows the level of prices in all the commodity and…

Q: What is the difference between cost push and demand-pull inflation? Using a diagram, explain why the…

A: Inflation (I) is the rise in the price (P) level prevailing in an economy or, in other words, it is…

Q: In the graph you've just made, what is the unemployment rate and the inflation rate if the Fed…

A: Phillips curve shows the relationship between the inflation rate and the unemployment rate.  The…

Q: he goal of stable prices is achieved when _______. A. the prices of food, clothing, and…

A: The main objectives of the Fed are to achieve price stability and maximum employment. Price…

Q: Find a period in Canadian history that experienced demand pull inflation. a) Describe the time…

A: 1(a). Demand-pull inflation happens when aggregate demand exceeds aggregate supply result in…

Q: In response to a decrease in interest rates, would the following things be smaller, larger, or no…

A: A decrease in interest can have substantial effects on the macroeconomic aggregates. Given below are…

Q: Which of the following could explain the (immediate) shift shown in the graph below (FIGURE 4)…

A: A framework called the AD-AS model is used in economics. It is used to examine the effects of…

Q: As productivity increases for corporations and the economy as a whole, what may be the effect on…

A: Inflation: - Inflation is the phenomenon of an increase in the prices of goods and services in an…

Q: The table below reports the actual inflation rate from 2016 to 2020. Complete the table, assuming…

A:

Q: Suppose that there are two simultaneous developments. First, government purchases are reduced.…

A: Monetary policy is the policy being adopted by the monetary authority of a nation for controlling…

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: Suppose that the equilibrium real overnight interest rate is 1 percent and the target rate of…

A: The inflation rate is the percentage change in the consumer price index of the current year to the…

Q: Suppose the Federal Reserve's policy is to maintain low and stable inflation by keeping unemployment…

A: Natural rate of unemployment can explain the rate of inflation. If natural rate of unemployment is…

Q: If the economy is in long-term equilibrium and cost of energy for production increases, which of the…

A: The long-term equilibrium is determined where aggregate demand is equal to both the short-run and…

Q: Explain the differences between creeping inflation and walking inflation?

A: When the rise in prices is very slow, it is termed as creeping inflation. This is also known as mild…

Q: True or False Since people buy a lot of food and oil (gasoline), we should pay most attention to…

A: Approach to solving the question: The student ought to think about inflation holistically including…

Q: Determine whether the following items increase or decrease inflation as they affect aggregate…

A: Introduction: Aggregate demand is a way of analyzing a country's entire demand for goods and…

Q: In theory, inflation not only ______ the value of consumers' money over time, but it also increases…

A: The effect of price change or Inflation can be seen on both the participants that are the consumers…

Q: True or False... There are an infinite number of combinations of real interest rates and inflation…

A: A nominal interest rate of zero is known as the zero lower bound that is the level of the interest…

Q: conomy is at a short-run equilibirum where nominal interest rates (i) are zero and there is a deep…

A: The nominal interest rate, frequently basically alluded to as the "nominal rate," is the interest…

Q: Real Interest rate (%) 1 IS1 ISo Output Inflation (%) VPC PC=2 ye Output Figure 3 A shock to the…

A: IS curve shows the equilibrium in goods market where Investment and saving are equal .shift  in IS…

Q: b. Suppose that in year 2, the real interest rate changes to 6 percent while inflation remains…

A: The nominal interest rate refers to the prevailing interest rate in the economy. The real interest…

Q: Inflation is one macroeconomic phenomenon that policy makers watch closely and intervene to bring it…

A: ANSWEE   Disinflation occurs when there is deep recession leading to a sustained fall in demand .

Q: 1. Under five years of this government, we have worked hard to reduce the rate of inflation. So for…

A: The booklet may not contain any direct lies, but it still has the potential to mislead readers by…

Q: Larry receives a portion of his income from his holdings of interest-bearing U.S. government bonds.…

A: The measure that depicts the general rise in prices of goods and services in the economy during a…

Q: given the graph and The current target inflation rate in 8 percent. The natural rate of unemployment…

A: Aggregate demand is the overall goods and services that are demanded by the economy at a given price…

Q: If natural unemployment rate is 5%, nominal interest rate is 7%, inflation is constant at 3%. The…

A: Answer in step 2

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: If the inflation rate displays inertia in the short run, a one percentage point increase of the…

A: Expansionary Monetary policy is used to boost aggregate demand in the economy. When central bank…

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

A: Demand-pull inflation: When there is more demand then it will lead to an increase in the price of…

Q: 4. The long-run Phillips curve This graph shows the long-run Phillips curve (LRPC) and several of…

A: The Phillips curve is an economic theory that suggests a trade-off between unemployment and…

Q: The short-run impact on the nominal interest rate of monetary expansion is different   from its…

A: False statement is "In the short run, nominal interest rate falls due to Fisher effect."

Q: During World War I and World War II, the U.S. government spent large sums of money on the war…

A: Inflation refers to the situation of increasing price level in the economy. Demand pull inflation…

Q: 3. An economy has full-employment output of 1000. The other aggregates are as follows Cd == Id =…

A: The output that is produced by the utilization of resources such as employment upto its maximum…

Q: Use the following data: Base Inflation Rate = .4% Shortfall = 10% of Y, Shock Inflation Rate = 3%…

A: Given : Base inflation rate=0.4% shortfall=10% of Yp shock inflation rate =3%

Q: Now, suppose that the public fully anticipates the Fed's decision to decrease the money supply.…

A: Given that the people have already anticipated that the Fed was going to decrease money supply. This…

Q: Q2. If output falls, what is likely to happen to inflation and employment?

A: The two factors inflation and unemployment holds an inverse relationship. It means that the rise in…

Q: Which of the following are likely consequences of rising inflation? Check all that apply. Savers…

A: The first part of the question is asking about the likely consequences of rising inflation.…

Q: 6. In 2023, breakthroughs in solar panel manufacture and installation and low-cost battery storage…

A: The equilibrium price level and output in an economy are determined by the aggregate demand and…

Q: hat are the two types of inflation? Describe what each is characterized by and draw them in separate…

A:

Q: Interest rates adjusted for the effects of inflation are real variables, inflation is a nominal…

A: Any nominal variable adjusted for the effects of inflation is called a real variable.

Q: Q. Explain why economists consider inflation at too high a level to be a bad thing.

A: The sustained rise in the price level is known as inflation. Periodical rise and fall in the price…

Q: Suppose that government expenditures decrease by 12 from 20 to 8. Fill out column (3) of the Table.…

A: The aggregate demand is the locus of all points which shows the aggregate demand for all goods and…