Inflation started to creep up in the late 1960's. By 1968, inflation was about 4%, and by 1973, inflation was about 6%. By 1980, inflation was at 13.5%. The Fed, led by Chairman Paul Volcker, engineered a recession that eventually disinflated the economy. Using the economic the concepts learned in class, especially the economics fluctuations model, explain how the Fed  disinflates the economy  from 13.5% to 3.5%, and what the effects of that disinflation are in the SR and the LR. You cannot draw graphs here, so you will need to explain the model and the shifts in words. Be thorough.  (The answer should contains 200 words)

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For the following questions, make use of provided information. Since the peak of the pandemic shutdowns, employment has been increasing. Unemployment peaked around 15% in April 2020, and was down to approximately 4% in February 2022. At the same time, estimated inflation rates have increased from approximately 1.5% in January 2021 to nearly 8% in February 2022. The Federal Open Market Committee (FOMC) is meeting this week (March 15-16). It is widely expected that they will increase interest rates by 0.25% (25 basis points). Explain why the FOMC is expected to increase its target overnight interest rate.

Sally, a resident of Scandia, goes to a salon for a haircut. The haircut, which usually costs $50, now costs $40. Sally is confused and curious to understand why she could get the haircut at a lower price despite the salon not offering any discounts. She also notices that the prices of all goods and services in Scandia have decreased. Which situation is occurring in the economy?Inflation Disinflation Deflation Stagflation

QUESTION ONE The Central bank of any country is a national bank responsible for the implementation of the monetary and fiscal policy of a country in order to avert or reduce inflation. This means that the bank is a vehicle through which the government accomplishes many of its economic objectives and deliver development to its citizens. Inflation can be too toxic to an economy as it diverts the economic intentions of any government. One of the impact of increased inflation is on an increased unemployment levels (Olivia Beria, 2016).i. Using Philips Curve, illustrate how increased inflations affects unemployment levels. ii. . Real money demand refers to the amount of money people want to hold in real terms, which means adjusted for inflation. It represents the desire for individuals to hold a certain amount of purchasing power in liquid form, in order to facilitate transactionsand make purchases. The real money supply is equal to the nominal amount of M2, divided by the fixed aggregate…

The following table describes the aggregate demand curve, where real GDP is expressed as the percent deviation from potential GDP and inflation is expressed as a percentage: Real GDP 2.0 1.0 0.0 -1.0 -2.0 Inflation 19 3.0 4.0 5.0 7.0 9.0 Due to a price shock, inflation increases by 2%. In the long run, what will real GDP be (expressed as the percent deviation from potential GDP)?

Draw a Phillips curve graph here that shows a natural rate of unemployment of 4% and a current inflation rate of 2%.   Make sure your lines and axes are labeled and your graph is complete! Use your knowledge of The Phillips Curve to answer the following questions. The threat of future inflation: makes people reluctant to loan money for long periods. makes people eager to loan money for long periods. has no effect on loaning money. increases the value of money paid back in the future. makes people reluctant to borrow money for long periods.   According to the short-run Phillips Curve, there is a trade-off between: interest rates and inflation. the growth of the money supply and interest rates. unemployment and economic growth. inflation and unemployment. economic growth and interest rates.   Which of the following is true of the long-run Phillips curve?  it shows there is a trade-off between unemployment and inflation.  it is positively sloped when the inflation rate exceeds…

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.

Which of the following is true regarding different types of inflation? Cost-push inflation is accompanied by higher unemployment. Cost-push inflation is accompanied by lower unemployment. Demand-pull inflation is accompanied by higher unemployment. Deflation is always accompanied by lower unemployment.

The Fed increases the amount of OMO purchases: a)Inflation increases b)Inflation decreases c)Inflation stays the same d)Can't tell